Hi,
microstepping does not give any great increase in resolution, as the article I linked to suggests that half-stepping (400 steps/rev) is the best achievable resolution with a two phase stepper.
What microstepping does give you is 'smoothness of motion'.
Astronomers first started exeperimenting with microstepping, no doubt with a view to getting better resolution. They were thwarted in that regard by the physics of steppers, but what they did find
is smoother motion which caused markedly less vibration of their telescopes. They took it as a win.
As you increase the microstepping smoothness increases, but in diminishing returns. Much of the 'smoothness' advantage is gained by 1/8th stepping (1600 steps/rev) and so there is little advantage in higher
microstepping regimes.
You may set your CNC machine to whatever seem appropriate, say 2000 steps/rev, as you have now and get the 'smoothness' advantage but you'll gain no more resolution than if you set it at
half-stepping (400 steps/rev). So your anticipation of getting 1000 steps/rev (at the stepper) resolution are dashed.
These are the physics of steppers, no getting around them.
You could use a gear or belt reduction, that does increase resolution. Let's say you used a good low lash (2<arc min) 5:1 gearbox and your stepper at half-stepping (400 steps/rev) then at the output of
the gearbox you'd get 2000 steps/rev or 5.4 arc min/step...that would be useful....but now your speed in in the toilet.
Craig