One reason to set a tolerance is that the dimensional difference must be determined when engaging multiple parts, such as a shaft being engaged to a bore. This is called fit, or clearance.
When considering the fit, the way to approach measurement differs depending on whether to base measurement on the shaft or the hole. For example, when considering the diameter of the shaft as the basis, if the shaft only needs to go through the bore, a clearance fit can be used. If the shaft needs to be fixed to the bore, it must be an interference fit. For something in between, a location/transition fit is used.