I think you guys have hit on all the right points already in this discussion— SketchUp is like all CAD systems in that it handles floating point numbers with fixed precision. Practically speaking, SketchUp carries 16 significant digits— 12 in front of the decimal place, 4 after.
Internally, SketchUp uses ‘inches’ as its dimensional unit. Without taking on position on the metric vs. imperial system, technically this is really only a semantic difference. But the net result is that SketchUp can reliably represent dimensions in a range from thousands of an inch to thousands of miles. SketchUp was designed to support folks making things as small as furniture and as large as cities.
MCAD tools like Solidworks handle smaller objects better, but struggle with larger ones. GIS tools from ESRI handle even larger objects than cities (like ‘the world’), but struggle even more at small scales. Microchip CAD systems (like those from MentorGraphics) are capable of modeling at angstrom scales, but would struggle to model a toothbrush. All these systems suffer from the same basic problem, though all have set their precision thresholds in different places to accommodate the particular needs of their users. Pure DCC tools (like Maya or Blender) just dispense with named units entirely, operating essentially in a unitless cartesian space.
The floating point number representation is only part of the story, but it is enough to explain why you see merging/face closing problems with points smaller than .001" Essentially, SketchUp can’t tell the difference between points closer together than the lower precision threshold, and so you get unpredictable results due to rounding errors.
Since more people are making small parts in SketchUp today, primarily due to the growth in interest in 3D printing, they tend to hit the lower threshold more often than the upper threshold. Scaling the manually object while you’re modeling serves to move you away from the lower precision threshold and into the happier middle ground between extremes.
john
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