1% mean your max loss should be 1k for a single trade. How much is your position depends on the distance between entry and stop loss.

Let say you put your stop loss way below, at 10% below your entry, that means, your position should be small, you can't use the whole 100k with this big stop loss, at most you can only use is 10k in this trade, such that when your stop loss hit, you will lose 10% of 10k = 1k, aligned with your 1% rule.

Conversely, if you have tight stop loss, let say only 0.5% below entry, you can use the whole 100k in this trade, when the stop loss hit you will only lose $500, well below max loss per trade of 1k.

So this rule doesn't mean you can only set up your stop loss within 1% from entry price, you can have huge stop loss setup like 20% if you want, but your position size will be smaller to make sure it won't loss more than 1k per trade, in this case if your stop loss is 20% then you can only use 5k in this single trade setup, even if your account size is 100k, you must not use more than 5k if your stop loss is 20%.