The reason this works is because of the base of our number system. In elementary school, we refer to the digits of a number by the "place" they are in. For example, in the number 5,463, there is a 3 in the "one's place" and a 6 in the "ten's place" and a 4 in the "hundred's place" etcetera.
The mathematical way of saying this is that each new digit counts the coefficient in front of a higher power of 10. So, going back to our example:
$\begin{align}
5,463 &= 5 \times 10^3 + 4 \times 10^2 + 6 \times 10^1 + 3 \times 10^0\\
&= 5 \times 1000 + 4 \times 100 + 6 \times 10 + 3 \times 1 \\
\end{align}$
The second equality is why we say the digits are in the "one's place", "ten's place", etcetera.
Now, when we go to multiply by a power of 10, we can use laws of exponents to make our work much easier.
$\begin{align}
18 \times 100 &= 18 \times 10^2\\
&= (1 \times 10^1 + 8 \times 10^0) \times 10^2\\
&= 1 \times 10^3 + 8 \times 10^2 \\
&= 1 \times 1000 + 8 \times 100 \\
&= 1000 + 800 = 1800
\end{align}$
The same holds for negative powers of 10, one example of which is the one you give in your question.