The inability to transfer less than 1 full bitcoin into your wallet is a limitation of whatever exchange you're using. (With MtGox, it seems you can actually transfer decimal amounts, but not a smaller amount than 1 bitcoin. E.g. you can transfer 5.1 bitcoins but not 0.1 bitcoins...)
The system "knows" to distribute your 1000$ coin to 1000 different people, because that's what you tell it to do... the coin itself doesn't have anything stopping it from being split up..
i understand the bitcoin... its digital not phsyical
its basically a digital piece of cash. and in real life i can't cut up a 1000$ bill and distribute it in pieces.
as i understand it, the software, that back checks the entire transaction history, only understands a full single bitcoin.
when i transfer bitcoins into my e-wallet... the smallest amount i can transfer is 1 full bitcoin. if that coin is worth 1000$ and i buy 1000 small things for $1 each, how does the system know how to distribute the original 1 full bitcoin to a 1000 different people without a "centralized" agency that holds coins.