And now you have your 10-bit Gray-code using consecutive addresses of 0000-to-1001 (0 to 9 in decimal). In this case, the sequence followed by this Gray code counter implementation is: 4, 6, 2, 0, 8, ...

This isn’t a Gray code because the distance between the last item (111) and the first item (000) is three. ... If you look closely at a rotary encoder disk, you can see the pattern.