The ability to modify the volume in smaller increments was previously available in earlier versions of OS X. Holding down Shift and Option before pressing the Volume keys on your keyboard would let you adjust the volume in quarter-steps. This ability was absent in OS X 10.7, but has returned in 10.7.4. This is not mentioned in the release notes.
[kirkmc adds: Well, I've never used this, so I'm not sure whether it was indeed missing. If anyone has a pre-10.7.4 version of Lion running, can you test it? (I have one in a virtual machine, but changing the volume from the keyboard doesn't affect VMs.) This feature first appeared in 10.5.]
Mac OS X Hints
http://hints.macworld.com/article.php?story=20120603003748251