First of all sorry if this question sounds too stupid or offends anyone.
One apple divide by two you get half an apple. $\large{\frac{1}{2} = 0.5}$
I couldn't get my head around with dividing fractions...
Half an apple divide by half an apple you get one apple? $\large{\frac{0.5}{0.5} = 1}$
How do I make any sense out of it? Any real life scenarios / applications that I can relate or explain dividing fractions?
You don't divide the onw half apple by one half of an apple. You divide one half of an apple by one half, just like you don't divide one apple by two apples, you divide one apple by two.
That said, the easiest way to understand division by fractions is to re-look at what division really is. When you are dividing $1$ by $2$, you are asking
Meaning you are solving the equation $2\cdot x = 1$ for $x$, and the solution of that equation is $x=\frac12$.
Similarly, calculating $\frac{\frac12}{\frac12}$ is the same as solving the equation
$$\frac12 \cdot x = \frac12$$ and it is clear that $x=1$ solves this equation.
As far as dividing fractions in real life, think about traveling with a car. If you drive $2$ miles per hour, how long will it take to travel one mile? It will take $\frac{1}2$ hours, of course. The time $t$ it takes to travel a distance $s$ is equal to the distance, divided by the speed at which you are traveling:
$$t=\frac sv$$