8 sits in the ones (1) column.
5 sits in the tenths (1/10) column.
4 sits in the hundredths (1/100) column.
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Now the four tells us that the number you've mentioned
has 4/100 in it.
0/100 < 4/100 < 10/100
But, 4/100 is closer to 0/100.
Therefore, 8.54 rounded to the nearest tenth is 8.5.