How is a standard unit divided into equally smaller or fractional units physically/experimentally? Consider the standard unit of length: meter. How was it divided into decimeter, centimeter, millimeter, etc. when there were no shorter lengths than the standard? What is the physical/experimental process involved?
 A: Well historically people were using all sorts of accurate and inaccurate units, remember there were times when measurements were done in arm length, foot length etc. So absolutely there were both smaller and larger units before the establishment of any system. 
For another part of your question, if you were given a meter rod and told to make a new unit $0.25 m$ I guess you would cut an equal length of cloth or paper and fold it as accurately as you can once and then again so as to make 4 fragments as equal as possible and then your task would be done, a new unit would be formed. Historically people were fiddling over unit systems such as mks, cgs, fps etc, but once the most established system i.e. the SI was established the decimal system was also widely accepted (it may be that decimal system was adopted before SI system, sorry if thats the case) anyway so we performed similar experiments by folding to make 10 fragments or joining 10 fragments and we got milli,centi, deci,deca,kilo,mega etc
