1000 mm = 1 meter
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mm stand for milimeters. Milimeters is a measurement of length, specifically 1/1000 of a meter.
I assume that with "capacity" you mean the measurement that is officially known as "volume". The standard unit of volume is the cubic meter. The liter (1/1000 of a cubic meter) and the milliliter = cubic centimeter (1/1000 of a liter) are also often used.
1000 millimeter is the same as one meter.
A kilometer is the same as 1000 meters. If you multiply a kilometer by 1000, you get a million meters, not one meter.
This is like comparing apples and oranges. A meter is a one dimensional measurement, and a meter squared is a two dimensional measurement.