I have seen a few very small models using something called "Modulex" pieces and have even heard that they are directly related to LEGO somehow? They don't seem to be around anymore so I was wondering what their history was?
Modulex bricks were produced by LEGO mainly for architects as the dimensions were more easy to scale up (they are 5mm in all directions).
You can find a full history (which I confess I didn't read) here
In time, Modulex started to focus more on signage and separated from LEGO, but it still exists nowadays.
The german Wikipedia article states that they were meant to be used by architects, etc. They are much easier to use for to-scale models, because they are 5 mm high (which results in a comfortable 1:20 scale). It would be quite hard to do that with the standard 8x9.6 mm LEGO bricks.