Once you realize that you need to be concerned with "how confident am I in this measurement?" - precision, in other words, you have 2 problems:
Thankfully, (luckily, perhaps) when you reported your measurement you didn't say "exactly 25.45 centimeters"! If you had, you would have made yourself an example of what physicists call an "idiot". Why? First of all, 25.45 cm is a measurement - made by a real measuring instrument, in this case a meter stick. A typical meter stick has marks at 1 millimeter intervals - your 25.45 cm measurement is pictured at left. The arrow appears to be half way between the 25.4 cm mark and the 25.5 cm mark - therefore, you were justified in calling the length 25.45 cm.
Notice that the last digit of the measurement is an estimate, though. Certainly, there is nothing wrong with this. In fact, it is clearly more reasonable to call the length 25.45 cm than to call it 25.4 cm or 25.5 cm.
However, how could you justify saying that the measurement was exactly 25.45 cm? You could certainly judge the measurement to the nearest 0.25 mm, and a strong case could be made, probably, for an estimate to the nearest 0.1 mm in this case. But exactly? That's just an unjustified guess! A careful estimate is not the same as a wild guess!
In the same way, you would not be justified in calling your measurement 25.452 cm. Doing this would mean that you claim to be able to divide a single millimeter into 100 equal parts - accurately - by eye! (You are claiming that the measurement is 52/100 of the distance between 25.4 cm and 25.5 cm.) If you make a claim like this, you had better be ready to back it up!
Apparently, the precision of a measurement is limited by the markings on the measuring instrument. The best that a competent physicist can be expected to do is estimate one digit between the finest markings on the measuring scale. (Physicists are expected to be able to do that, by the way.)
This limitation on the precision of a measurement is commonly called scale error. Actually, this is unfortunate, since "error" carries the connotation of "mistake" - but
Scale errors are not mistakes.
For this reason, I prefer the term scale uncertainty, although "scale error" is more commonly used. The scale uncertainty is ultimate limit to the precision of a measurement, but it might not be the largest factor affecting the precision of a measurement.
At this point, you should realize that: