When I did my FAA ATP conversion the practical test standard for the ATP - essentially anL IR test - specified a quarter scale tolerance. Other countries also use a specified tolerance eg Oz now uses 1/2 scale but a number of years ago it was 2 dots
Julian, I suspect the tolerance specification is to provide a known probability of deviation outside 1) the tolerance specified, and 2) the display area of the instrument.
If the a/c is flown at full scale deflection the likelyhood of flying outside the display capabilities is greater than if you are nearly always contained within the defined parameter eg 1/2 scale etc.
Once you're at the edge of the instrument how can you know if you've gone any further outside?
Flight safety is calculated on the basis of probabilities. Procedures, equipment & training (read: accuracy level to which the pilot is expected to perform) are designed so that the interaction of all them constrains the chance of an accident occuring to within the specified probability level for that part of the flight.
Constraining the tolerance limits that the pilot must be capable of achieving is one factor that contains the safety level to within the defined probability for that segment of flight.