I think the answer in

indent (which was already mentioned in @Omega Krypton's answer)

Periods in periods result in my contraction.

If we write period after period, our text is not separated into paragraphs, so we don't have any indents.

One of which appears in the expanded starting fraction.

A paragraph starts with an expanded fraction, the expanded 'space', the indent itself.

I am often confused with that is taken from "in d'nest".

It sounds similarly

To exhibit explicit qualities is how you'd use me best.

It's purpose is to explicitliy show the distinct fragments of the text (or, if we use the hint "One line describes a 'word' it is commonly confused with", it can be a reference to the word 'intent')

I think the answer is

indent (which was already mentioned in @Omega Krypton's answer)

Periods in periods result in my contraction.

If we write period after period, our text is not separated into paragraphs, so we don't have any indents.

One of which appears in the expanded starting fraction.

A paragraph starts with an expanded fraction, the expanded 'space', the indent itself.

I am often confused with that is taken from "in d'nest".

It sounds similarly

To exhibit explicit qualities is how you'd use me best.

It's purpose is to explicitliy show the distinct fragments of the text (or, if we use the hint "One line describes a 'word' it is commonly confused with", it can be a reference to the word 'intent')