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A denomination is a proper description of a currency amount. It is oftentimes a sub-unit of the currency. For example, traditionally a cent is 1/100th of a particular unit of currency.).
Monero denomination names add SI prefixes after dropping the initial "mo" for ease of use. Actually, the smallest unit of Monero is 1 piconero (0.000000000001 XMR).
Support for input using SI prefixes was added to the Monero codebase on March 3, 2017 by Moneromooo. The smallest unit of Monero (10^-12 XMR) was originally called a tacoshi in honor of user Tacotime, an early Monero contributor and was later renamed for ease of use and consistancy.
The smallest fraction of Monero in the current monerod implementation is also known as the atomic unit, which is currently one piconero.