Imagine a computer monitor, and the pixels that exist within it. Now imagine you attempt to do the same thing in this instance. You try to make a right triangle where the hypotenuse = C, and the two legs A and B measure 1 pixel each.
Well, you start off with one leg which is one pixel in length, and then another leg 90 degrees adjacent to that one, forming a single pixel. Then try to make a right triangle out of that. Keep in mind, you can't divide a pixel into two smaller ones on a computer screen unless you have some alien technology. You just can't do it.
As far as I am aware, an plank length is the smallest length that would physically make sense in our 3D space. It is the "pixel" of the world. You can treat the plank length as if it were something that could be divided and get root2 plank lengths and make one, but it wouldn't work in our 3D space. You just can't do it, just like you can't divide a pixel in a monitor.
EDIT: Dave, I found a bug in SMF, or possibly an unpleasant feature. When editing, and using the alt code 251 to get a square root symbol, (?) I can see it while editing
http://prntscr.com/g4estebut when I post it, I just get a question mark.