After reading this thread, I decided to check the DRO on my old mi,ll/drill. I hadn't realized the the scales could be calibrated. (thanks, Bob!)
I set up two 1-2-3 blocks the align with the x and y axes and mounted a tenths reading test indicator on the head. I zeroed the indicator and DRO on the 1-2-3 block and then moved out 6" on the x axis using a 6" parallel as a spacer.
I had previously measured the parallel using my 6" micrometer and knew the actual length to .0001" and the accuracy of my micrometer. As I recall, it came out at 6.0004" I then corrected the DRO calibration to read the same. I repeated for the y axis.
There is an assumption that the micrometer is accurate and the only way to tell for certain would be to calibrate it using a traceable standard. I do not have one so I have to assume that it is reading correctly. For my hobby purposes, this is not a serious issue for me.
This brings up the more general problem of how a hobbyist goes about verifying his/her metrology instruments. My particular attack is to try measure known values. To that extent, I use gage pins for values under one inch. For longer distances, making a set of blocks or pins of appropriate lengths and measuring them with calibrated instruments and reserving them as your internal standard works. I realize that proper calibration dictates the the standard used have at least three times and preferably ten times better accuracy the the instrument you're calibrating but it isn't necessary for most purposes. If I can say that a measurement is good to +/- .0002", it will meet almost all of my needs.
I also take the viewpoint that if two instruments give exactly the same reading, they are most likely both accurate. Errors rarely happen in exactly the same amount. For smaller micrometers, I have a number of them to compare in this way. For my 0 -6" set, I can measure the calibration standards with two different micrometers (e.g., the 5" standard can be used to check both the 5" and 6" micrometer. In this way, I can build up enough confidence in me metrology instruments to permit functional use of them in my work.