You can measure the outside diameter or the inside diameter of a cylinder.
Just another example of real life math at our house. A caliper is a GREAT way to practice decimals because you can measure tenths of a mm. Very cool.
I should point out that the Vernier scale isn't just used to measure out increments smaller than a mm, but smaller than the smallest increment on your measuring tool which in this case was a caliper with mms on it.