A minimum and maximum value for the dimensions of a part. It is very important in determining the accuracy to which a part must be manufactured. Used very heavily in the machining industry.
For example,you need a tube made that is approximately 1" in diameter, but you want to show that it may be up to 1.1" or as small as .9". You would create a tolerance showing the 1" dimension as the desired diameter, and showinmg 1.1" and .9" as acceptable (tolerable) limits by selecting the dimension, and changing the Tolerances pop up in the Dimensions floater from none to two. You then enter the difference (.1") from the desired dimension that is acceptable.
One tolerance would mean that 1' is desired, but it can be as large as 1.1". Smaller than that would not be tolerable. If you select Limit as the kind of tolerance, then it would not show the optimum dimension, just the two limits that are acceptable (in our example, .9" and 1.1").