It's a 128 bit address. Routing is done on VLSM, but, generally for DNS purposes, these are expected to be at least on nibble boundaries.
There is an intent to support what is known as EUI-64, which means every subnet should be a /64, however, there are people who number smaller subnets and that is supposed to work, but, it will break certain IPv6 things like stateless autoconfiguration (which is optional).
We are one of these people who opted to use smaller subnet sizes for point-to-point networks (i.e router transfer nets), If you are interested in what we did and want to see some examples of what other people are doing check out a presentation that I gave some time ago about our deployment http://www.convergence.cx/ipv6clara.ppt (apologies for the lack of PDF) Slides 2-15 Dave.