Tolerance and percent error
Tolerance is the allowed band either side of the stated value, so the full acceptable width is twice the tolerance.
A worked example
A shaft at 30.00 mm ± 0.10 mm passes anywhere from 29.90 mm to 30.10 mm, a band 0.20 mm wide. A reading of 19.6 cm against a true 20.0 cm is a percent error of 0.4 / 20.0 x 100 = 2%.
The mistake people actually make
Percent error divides by the true value, not by the measured one. Readings that agree closely with one another are precise, but they can still be inaccurate if the instrument needs calibrating.