Mac OS X.8.5 system prefs, keyboard, input sources, text, then check boxes next to fractions you want to activate. For instance, you type 1/2 and it automatically changes to smaller characters, 1/2 (but not in this program, apparently.)
I started this thread seven years ago. Since then, I’ve switched to a MacBook Pro running OS 10.9.2 and I’ve noticed the fractions are formatted automatically. 
If I type 1, /, 2, [space] here, it automatically changes to ½.
Yeah, it’s pretty much automatic now, you can still turn it off in preferences. Sometime in there (Mountain Lion?) Mac OS X made it easier to type accented characters, too – hold down the “e” key, for example, and instead of repeating, it’ll pop up a list of character accents with “e” as a base. (You can disable this with a system default if you never use accented characters, and go back to just repeating characters instead.)
Way easier than memorizing alt+Unicode code points on Windows.
Where is the option? Not that I necessarily want to use it, but when I type 1/2 I get just that: 1/2. It doesn’t change. I’m OS X Mavericks, but I don’t remember it ever changing for me before, either. (And I looked in System Preference Keyboard > Input Sources and I don’t seem to see it there.
ETA: I should say that Word does it, but I seem to remember Word doing that in Windows, as well. That was an application-specific auto correction, like how it changes two hyphens into an em dash.
bnyjmujnbhbgvfcdxsz’;/.lk,jmhnbgfvcdsxzp;.’,l;oaz;/.L
hmmm - Piper Cub’s first post on the SDMB - I’m so proud!
Hmm, that’s weird. Prior to Mavericks, it used to be in Language/Region->Text (which is now in Keyboard->Text). It basically had a long list of auto-substituted fractions, which you could turn on and off. It’s done as part of the “automatically correct spelling” general option.
My Mavericks system which was upgraded from a previous operating system still has that list, but a newer system that was installed with Mavericks on it does not. I wonder if they took it away? I didn’t notice because I usually use Word, which has its own mechanism.
You can add back common fractions manually using the auto-correct feature, though: in the “Preferences->Keyboard->Text” tab, add a substitution for “1/2” on the left, and on the right use the Character palette to add the one half fraction, and it’ll be available globally after that.