Your scale on paper isn't really interesting for the computer since the size of the image of your plan is in pixels. Please, have a close look to the video tutorial ; it should help you.

By "too big", I mean not too many pixels in your image. If your image is too big, program will run slower ...

I have imported an image with a 1/4 inch scale on paper. Now this is the step I don't understand. Can some body explain this to me?

"Define the scale of the image by moving the end points of the colored line drawn in the image, in such a way that this line matches a known length. Then type the real ...