The mildots are used to determine range. Adjusting for bullet drop is a completely different problem that depends on the round used.
Everybody is familiar with degrees--360 degrees to a circle. Right angles are 90 degrees. And so on. There are other ways to measure angles, though. "Radians" is a popular technique because it makes some math easier. There are 2 * Pi radians in a circle or roughly 6.3 radians in a circle, just like there are 360 degrees in a circle.
The centers of the dots in a mildot scope are 1 milliradian apart, ie 1/1000 of a radian.
When you look at something up close, say a six foot man at 100 yards, it takes a certain angle from his head to his feet. Move him back 100 yards more and he appears smaller, because he takes up less of an angle from head to toe. ("Subtends" less of an angle.)
Suppose you know a man is 6 ft tall. You measure the angle from his head to his toes. Because you're a smart guy, you can use these two facts--his known height and the angle--to determine how far away he is.
There's some basic trig involved. First of all, there's something called "tangent". In a right triangle, that's the ratio of the lengths of the two segments at right angles to each other.
| A
____|
B
In this case, iimagine there's a line from the end of B to the end of A, forming a right triangle. That line is called the "hypotenuse". There's an angle formed between B and the hypoteneuse. Call it "theta", because it's traditional.
What's the angle? Depends on what the lengths of the two legs of the right triangle are. But if you know how long the legs are, there's only one possible angle theta could be. What's more, if you have two triangles that have the same ratio between the legs, the angle theta is always the same.
The greeks noticed this and came up with the idea of "tangent". Tan for theta is in this case A/B.
So we can write the equation TAN(Theta) = A/B
Suppose we know A. In that case we can solve for B, B=A/TAN(Theta).
This is the basics of ranging with a mildot. Think of the A leg as being the height of the target, and the B leg as being the distance to a target. We know A, We know theta, and we can determine TAN(theta). The only unknown is B, the distance to the target, and we can use some basic algebra to determine that.
As it turns out, TAN(1 miliradian) = .001, TAN(2 miliradian) = .002, etc. So, using the formula above, TAN(Theta) = A/B, we can put in names for the values we're dealing with:
Height in miliradians * TAN(.001) = height of target / distance to target
height in milliradians * .001 = height of target / distance to target
distance to target = (height of target * 1000)/ height in milliradians
So suppose we have a 6ft guy. We look at him in the scope and discover he takes up 4 radians of angle.
distance to target = (2 yds * 1000)/4
distance to target = 500 yards
He starts running away. A few seconds later he takes up only 3 miliradians on the scope.
distance to target = (2 yds * 1000) /3
distance to target = 666 yards.