Capt,
Yes the track distance change viewed on the ND is incremental in decimal of 0.1, however VNAV calc is continuous.
What about when your making a VNAV approach/arrival of whatever type (NDB,VOR,LLZ,GNSS,RNP,LNAV/VNAV etc..). I can assure you VNAV is calculated continuously to the foot. It takes into account programmed decent winds (unless a direct too has been executed then it uses current wind), and from that uses the expected ground speed to work out the profile. It will not take into account unexpected tail winds or excess energy from speed reductions not put into the FMC.
Another example is how the FMC calculates turning radius when turning at a waypoint in LNAV. If the turning waypoint (eg. Initial Approach Waypoint) has on the LEGS page a speed of 180Kts, and you are doing 210Kts, you can bet it will shoot through the Localizer onto final.
It does not continuously update as many parameters as we would like it to do, however if you tell it whats going on in the bigger picture it does a very nice job all the same.
Cheers