As mechanically inclined person:

"Designed to narrower tolerance" usually just means it's more expensive and accurate. For bearings it's great idea if you want longevity.

Allowance on the other hand is completely different matter.

the practice of buying the cheapest version of something, in my experience, should not be applied to things like tools. there is a remarkable difference between a $20 no-name multitool and a nice Leatherman, or a nice pair of binoculars and a cheap Chinese knock-off. electronics, of course, is a totally different story. everything has nearly the same brains, with perhaps a UI quirk or two on the cheapest version.

It should also not be applied to consumer electronics. When buying the cheapest no-name device available, you'll pay back what you "saved" in continuous frustration. These devices are as bad as possible; any worse and it'd be fraudulent to sell them.

Tighter tolerances often lead to increased reliability.

I think it is a matter of both domain for how things fail and how reliability is defined. In some circumstances looser tolerances can be a bit less efficient but more fault tolerant and thus 'reliable'. Although its lifetime might also be shorter than a tighter toleranced device if both were fed 'clean' inputs.

Of course the fault tolerance (apologies for overloading the term tolerance) also isn't guaranteed in every domain. If a seal breaking would wreck the process it certainly wouldn't give /any/ reliability over a tight seal.