Hello!
That one inch is divided into eight even sections.
Look at the distance between where the insect's length ends and the "1". That space in between is how long each section is. It takes eight of those to make up one inch. The insect's length take up seven of the eight sections - almost an inch. So, the length of the insect is 7/8 in.
As for 0.875, that's the decimal form of the fraction. It means the same thing.