So far I have not had to do better than set the barrel to a clear extension point on the scale then lock the tailstock in the start position (my tailstock has a window and a clear line for the scale to match up to and a 1/8″ pitch) and then estimate the tailstock handle in 1/8 rotations from the starting point which is horizontal. This is close to the nearest 1/64″ in depth. So, for example, 1 full rotation plus 1/8 rotation would give me 9/64″.
If I need better I can use a set point on the tailstock scale as the target depth, set the tailstock up to the start point on the part you are working on, wind the barrel in a bit then use an indicator to move the tailstock towards the part by the required depth then lock it in position. Then when you wind the barrel out to the set point on the barrel scale you are at the correct depth. Note that often this requires a small start on the machining of the part to be able to set the start point correctly.
Martin C