This sentence comes from goo here: https://dictionary.goo.ne.jp/word/en/見える/
地平線上に一隻の船が見えてきた。
A boat appeared on the horizon.
When I was attempting to assign the characters their correct readings,
ちへいせんじょうにいっせきのふねがみえてきた
I found on wwwjdic that "horizon" is two words in Japanese:
地平線 【ちへいせん】 horizon (related to land)
水平線 【すいへいせん】 horizon (related to sea or lakes)
My question: Is goo wrong, or can a ship appear on a (land) horizon?
You may think of a relationship similar to that of 少年/少女, 俳優/女優 or 兄弟/姉妹.
地平線 ／ ＼ 地平線 水平線
According to the Wikipedia definition, 水平線 is an alternative name of 地平線 used when the surface is watery:
地表面が海などの水面であれば、水平線とも呼ばれる。
In that example, 水平線 is more specific and usually better, but 地平線 is not necessarily wrong, either.
(Also, I think it's technically possible to see a ship coming out from behind an island.)
Yes that's right.
「地平線」 is the horizon on land (the land and the sky seem to be connected).
「水平線」 is the horizon on the sea, or at least when the sea is in front of you (the sea and the sky seem to be connected).
Regarding your question "Can a ship appear on a (land) horizon?", there is an important point to state, and that is「地平線」 can be used anytime to describe a horizon even if it was a "Sea horizon", but the opposite isn't true. Therefore, 「地平線」 may have been used in 「地平線上に一隻の船が見えてきた。」to replace 「水平線」, or that the boat actually appeared in a land horizon (coming from a distant port for example).
