It depends on what you're trying to achieve. Since most engineering projects have some sort of intermediate product, such as design analysis reports, preliminary designs, board layouts, specifications, etc., they can all be milestones, or perhaps, inchstones. Major program events such as design reviews, acceptance test, etc. are normally considered to be milestones.
As a general rule, line items should be on the order of 80 to 160 hrs, at which point, you should have some sort of quantifiable or measureable output that you can take create for if you are doing earned-value reporting.
Tasks that are too long, e.g., several hunderd hrs with no intermediate output can quickly lead you astray, until it's too late to recover.
TTFN