There always seems to be a confusion amongst folk who are good with spanners etc. but who are not trained engineers about what is meant by tolerances. Most talk of tolerance when they mean clearance.
Tolerance is the range of dimension permissible on a completed part as specified on a drawing.
Clearance is the gap between two mating parts. It can be positive meaning the two parts can move against each other. Negative means that the two parts interfere with each other and are therefore locked against each other.
The larger the clearance the free-er the two parts are to move against each other. The greater the interference the tighter the two parts are locked together.
Given that tolerances are not generally shown on model engineering drawings then an understanding of the clearance between the two mating parts is the knowledge that the newcomer to metal work needs to learn. (For the benefit of new comers this clearance is known as the "fit" of two components.
In my opinion the most useful guide to this is in "The Model Engineers Hand Book by Tubal Cain" . (Page 5.18 is the grubbiest page in my working copy of the third edition plus I have copies of the page around my work areas.)
He lists 12 classes of fit and puts numbers to them making the allowance necessary for the relationship of clearance to diameter. He goes from shrink fit through to large clearance fit via drive, slide, close run and easy run to name a few.
When all is said and done for one off production such as in our projects our main object is for things to work and the way they work is down to the correct clearance.