I am also using Mach 3 and as far as can tell the resolution is set by the by the microsteps, i.e. the motor can be stopped at any of the fractional steps as set on your driver board not just whole steps. So if you select 16 microsteps and you have a 1.8 degree stepper your resolution will be 3200 steps per rev or 0.1125 degrees and you can stop on any one of these. Note there will be a tolerance on these steps in practice. If you have a 2.5 mm pitch lead screw the resolution per step or linear resolution will be 0.78125 um per step, i.e. very fine. In mach 3 you can configure the pulse rate as 25000, 35000 and 45000 pps and typically for a 1 GHz processor I believe you can get away with 35000 pulses per second which is one of he setting options. Assuming your stepper driver can handle this pulse rate then your maximum linear speed will be 27.34 mm per second, i.e just over 1" per second. If you have a fast PC processor you may be able to get away with 45000 pps and hence increase your linear speed to 35mm/s. I would start off at the lower pulse rate and work up. to see when you start to lose pulses. Clearly if you reduce your microsteps to 8 then you will halve the step resolution but double the maximum speed. The main reason for fine microstepping is to get smoother operation and stop judder not necessarily to achieve higher resolution accuracy.