The Tolerance button, when turned on, is supposed to emulate the slight differences in real analog circuitry. For instance, each channel strip on an analog console may each have a 22k ohm resistor in its circuitry, but there is a manufacturing "tolerance" on that value. So on channel 1 the resistor could be 21.5k ohms and on channel 2 it could be 22.5k ohms, and so on.
With that in mind, although each channel should be identical, they are each ever so sightly different.
So if we add say some Console Emulation to each of our channels and turn on the tolerance button, it is supposed to impart ever so slight differences in sound across the channels.
It may be that, practically, you cannot hear the difference, be we are assured that it is there, so we might as well use it :-)