In the very old days they were one meter parts, or more accurately one "unit" of Unity game space, and even engine thrust was measured in Newtons, not kilo-newtons, and mass in Kilograms not tons. When Kerbals were added as distinct entities the parts had to be scaled up to keep the Kerbals large enough to avoid issues with Unity, so the old 1 meter, 3 Kerbal Mk1 pod became the single Kerbal 1.25 "unit" pod we know today. We still have 1.25, 2.5 and the rest because that value is in the part.cfg's, so modders and others refer to them in this way