Why Do Engineering Drawings Use Tolerances Instead of Exact Dimensions?

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On a manufacturing drawing, a dimension often comes with a permitted range rather than one exact number. I understand that real parts cannot be made with perfect precision, but how are those limits chosen in the first place?

For example, what determines whether a hole needs a very tight tolerance or can be allowed to vary more? I’m trying to understand how designers balance how the part functions against inspection time, machining difficulty, and cost.

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