No. Each NFT represents one whole, indivisible parcel.
or will this parcel be divided into many smaller once and this is how it will be sold as NFTs?
When they say something is indivisible, it means it will remain like that, and one NFT is tied to one parcel of land, and it can only be like that. Legally, it can't be divided, and if the first owner of the parcel of land, which is linked to the NFT, wants to resell it, they won't have to divide the land and sell it; instead, they will sell the whole land to the new owner, and there will be nothing like dividing it.