What is a fractional share?

Exactly what it sounds like: less than one whole share. If a stock trades at $250 and you invest $50, you own 0.2 of a share. Your broker buys whole shares and keeps track of which customers own what slice. From your side, the account just shows 0.2 and it rises and falls with the price like any other holding.

Dividends work in proportion. A $1-per-share dividend pays you 20 cents on that 0.2 share. Voting rights typically do not pass through on fractions, which almost nobody misses. Selling works the same as a whole share; you can sell the fraction or add to it later until it becomes whole.

Fractional shares changed who can invest. Before them, a beginner with $100 a month could not sensibly buy stocks priced in the hundreds of dollars each, so they bought whatever was cheap, which is a bad way to choose. Now the share price is irrelevant and you can spread $100 across ten companies.

A couple of limitations: not every broker offers them, not every stock is available fractionally at those that do, and fractions generally cannot be transferred between brokers, so you would sell them before moving your account.