This phrase means that if you give someone a small amount of freedom or a little favor, they may take advantage and demand much more than you intended to give.
The phrase is believed to originate from the 16th century or earlier. Its earliest form is believed to be "Give him an inch and he'll take an ell," with "ell" being an old measure of length. The modern version substitutes "mile" for "ell" to give it a more understandable and dramatic impact.
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