The milestone is a marker of progress. The use of milestones to help navigation began in Roman times with marble or concrete monoliths erected on the Appian Way. They did not usually provide indication of distance to and from, preferring to inform you which Emperor commissioned it. Later milestones included distances and this information increased their utility so that milestones and signposts are still used today.
Those familiar with the five room dungeon realise each room is itself a milestone. This may seem obvious but is helpful in mapping out what is called in the writing trade as 'beats' and story arcs. It can help to realise you have achieved certain objectives and how far you've already travelled - what you know getting here may be useful in helping determine what actions need to be taken.
In 4th edition D&D, a milestone is reached when you complete two encounters without a rest. Rather than get into how that works or may potentially structure your sessions, milestones can be used as a resting point (or in some games a restore point) or basecamp to continue from. An interesting point, is it possible to capture the information from a game in play as a save point and would the game benefit? Hmmm.
Milestones can also serve as an indicator of how much further you need to go. The five room dungeon is a useful metaphor. You could be in a museum or railroad with many more stations. If you know what you need to achieve the final goal (and if not, why not?) milestones indicate how much further you have to go - if you're on a time-sensitive plot, you may need to speed up or slow down.
Like the Appian monoliths however, the usefulness of a milestone is enhanced by giving additional information to the audience (if not the characters). Milestones may be metaphorical or tangible. Themed plots may indicate what kind of things lay ahead; not all cues may be explicit or encounters in their own right, a plot arc for undead may feature a skull by a milestone or fresh roadside grave for example.
As a navigational device, milestones are useful points of reference. While they are not as widespread as they were, the quality of information for your milestone can provide a sense of continuity and is helpful in the development of longer-term campaign play.
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