Boy, sure seems like for hobby stuff that 0.0005" would be close enough. Anything tighter than that practically gets into "the Emperor's New Clothes" realm. Not many of us here working on parts for the space shuttle. Depends on your projects.
Titanium Knurler (pretty sure) did the math on the effective diameter difference when cutting with a vertical offset on the tail stock. It varies based on the diameter, but it's practically im-measureable for a 1" diameter turning.
For example, if you are cutting on center at the head stock and your diameter is 1.000", the radius is naturally 0.500". If your tail stock was 0.0005" higher, then your diameter would be the square root of ( (0.5)^2 + (0.0005)^2 ) or 0.50000025". As my dad would have said, "good enough for the girls we go with".
Bruce