from Wikipedia:
Firearms
This unit is commonly found in the firearms industry and literature, particularly that concerning the accuracy of rifles. The industry tends to refer to it as minute of angle rather than minute of arc. It is popular because 1 MOA subtends approximately one inch at 100 yards, a traditional distance on target ranges. A shooter can easily readjust his rifle scope by measuring the distance in inches the bullet hole is from the desired impact point, and adjusting the scope that many MOA in the same direction. Most target scopes designed for long distances are adjustable in quarter (¼) or eighth (⅛) MOA "clicks". One eighth MOA is equal to approximately an eighth of an inch at 100 yards or one inch at 800 yards.
Calculating the physical equivalent group size equal to one minute of arc can be done using the equation: equivalent group size = tan(MOA ∕ 60)*distance. In the example previously given and substituting 3600 inches for 100 yards, tan(1 MOA ∕ 60)∙ 3600 inches = 1.0471975511966 inches.
In metric units 1 MOA at 100 meters = 2.90888208665722 centimeters.
Sometimes, a firearm's accuracy will be measured in MOA. This simply means that under ideal conditions, the gun is capable of repeatedly producing a group of shots whose center points (center-to-center) fit into a circle, the diameter of which can be subtended by that amount of arc. (E.g.: a "1 MOA rifle" should be capable, under ideal conditions, of shooting a 1-inch group at 100 yards, a "2 MOA rifle" a 2-inch group at 100 yards, etc.) Some manufacturers such as Weatherby and Cooper offer actual guarantees of real-world MOA performance.
Rifle manufacturers and gun magazines often refer to this capability as "Sub-MOA", meaning it shoots under 1 MOA. This is typically a single group of 3 to 5 shots at 100 yards, or the average of several groups. If larger samples are taken, i.e. more shots per group, then group size typically increases. [2]