What is the geometric meaning?
f′(x0) is the slope of the tangent at (x0,f(x0)), the instantaneous rate of change.
Why shrink h?
The derivative is a limit; only as h→0 does the quotient equal the tangent slope.
When does the derivative not exist?
Corners, cusps, vertical tangents, mismatched one-sided derivatives, discontinuity.
Why the small gap from the formula?
We use a finite h, so there is truncation error; at h=0.001 it is very close.
How does the quotient relate to derivative rules?
The quotient is the definition; the power/chain rules are its simplifications.