Tolerances in machined parts is very important. You can’t have a particular part, like a bearing, not fit snuggly into the race. If the tolerance is too low, the bearing will fall right out and cause downtime and possibly even catastrophic failures. With having such “tight” (1%) tolerances, manufacturing has to be much more precise. On the opposite of that, with a lower tolerance requirement, such as 20%, manufacturing isn’t as much of a concern because there is such a huge window of dimensions that the part(s) can fall into. With not having to be so precise, production rates can be increased, costs of precise machining are reduced because it is not needed. In conclusion, the higher the tolerance, such as 20%, is more time and cost effective versus something requiring a 1% tolerance.