A tolerance is the acceptable deviation band for a dimension. The most common mistake on drawings is writing the same tight tolerance against every dimension.
Usually only two or three dimensions on a part are critical: the bearing seat diameter, the centring diameter, the centre distance. The rest can run on general tolerances.
A tight tolerance means slower cutting, more measurement and sometimes grinding. Each of those shows up in the lead time and the price.
A practical suggestion: when you ask for a quote, say which dimension is genuinely critical. Talking that through usually lowers the price of the part directly.