In Kabbala, the Yud usually represents the point of wisdom from which all begins. It also represents the essence-spark of G_d within each of us. Here's the story that inspired this episode:
This happened when Rabbi Shalom Dovber was about nine years old. He was walking home from school with his older brother, Zalman Aaron, who was about eleven. Zalman was a stickler with grammar, scrupulous about every word of the prayers. Shalom on the other hand, was not so meticulous about these things. So now and again, Zalman would scold his younger brother about how he prayed.
This time, Zalman demanded of his younger brother, "Why is there a point after the word B'chemla in Modeh Ani?"
Zalman was referring to a comma. It seems his little brother was ignoring the punctuation and stringing words together that really should be apart, thereby convoluting the meaning — which was just the sort of thing his older brother couldn't tolerate. But the little boy had an alternative explanation for that little point.
"The whole idea is in a point," he answered. "And the point has to expand and spread throughout the entire Tefilla."
When the boys' father, the Rebbe Maharash, heard about this, he told their teacher, "Teach my younger son all you want. Just take care not to cause damage."