That atmosphere

(Source)

What you're looking at there is two different images of the same binary system, LP 359-186. The two stars are a mere 0.31 arcseconds apart--substantially less than the 1 arcsecond scale at which the atmosphere is stable. The left-hand image was produced using speckle imaging, while the one on the right is the result of a longer exposure. The comparison pretty clearly shows the effect atmospheric diffraction can have on the resolving power of a telescope. Angular resolution might be $\lambda/D$, but only up to the point that the atmosphere allows. Unless you're compensating for atmospheric diffraction with a technique like speckle imaging or using adaptive optics, getting down to a resolution like .31 arcseconds just isn't possible from the ground.