Yes, millimeters are typically marked, with a special mark half-way at 5mm. Once you're beyond 1m in length one might skip them, but even then rulers often have them. Small things are normally measured in millimeters as well, though usually some tolerance is expected. For example, one of my rings has a diameter of 21.7mm and was advertised as such. Of course, if you don't need this precision, you round to whatever decimal place you care about and use the nearest unit (like in any system). I don't think of millimeters as particularly tiny, more like the basic unit of "smallness".

(And I fully agree with lucidfox. Imperial units are insane.)