TL;DR
Here we explain what defines measurement precision. The post is aligned with the Black Box Software Testing Foundations course (BBST) designed by Rebecca Fiedler, Cem Kaner, and James Bach.
The precision of measurement is defined with the measurement instrument. We can all agree that precision is the quality aspect of the measurement instruments. We all want a more precise instrument.
But what defines precision? Here is a measurement instrument heuristic:
More marks, the better the instrument.
If you are using a digital stopwatch to measure a 100-meter sprint race, the more decimal places mean that you have a more precise instrument. And you would have more satisfied race spectators because, with the more precise instrument, there would be less chance that two opponents have the same time result!
Do we really always need instrument with high precision? Another problem is when we have an instrument with too high precision. For example, a hundred-meter sprint race that you have to measure with a stopwatch that could only step in 0.1 seconds. So you would need to count by hand how many 0.1 second intervals passed during the race. You have a high precision instrument, but your measurement would have a high error.