In order to study the relation between clustering and binary formation, the analysis by Gomez et al. of the clustering of young stars in the Taurus region has been extended to smaller separations by using data from recent searches for close companions to these stars. The Taurus young stars are found to exhibit self-similar or fractal clustering on the largest scales, but there is a clear break from self-similarity at a scale of about 0.04 pc which divides the regime of binary and multiple systems on smaller scales from that of true clustering on larger scales. This break provides clear evidence for the existence of an intrinsic scale in the star formation process, and this scale is found to be essentially equal to the Jeans length in typical molecular cloud cores. The associated mass is of the order of one solar mass, supporting the hypothesis that typical stellar masses are determined by the Jeans mass. Both the self-similar clustering of the Taurus stars on the larger scales and the power-law form of the upper stellar IMF may have their origin in hierarchical, and perhaps fractal-like, cloud structure. The very different distribution of stellar separations that is observed in the regime of binary and multiple systems strongly suggests that these systems are not formed in the same way as the hierarchical clustering, but by a distinct mechanism which is probably the fragmentation of collapsing clumps of about the Jeans size. The evidence suggests that nearly all stars are formed in binary or multiple systems, and that some of these systems are subsequently disrupted by interactions in the denser star-forming environments to produce the observed mixture of single, binary and multiple stars.