Short answer: If the start and end nodes of a line are within the specified tolerance of each other, then the length of that line will be zero.
For background information on tolerance / rounding errors:
When the documentation mentions accommodating rounding errors, it's really talking about this type of scenario:
1 decimal degree / 60 = 0.01666666666 (recurring) decimal minutes
However, 0.01666666666 decimal minutes * 60 is not equal to 1 decimal degree, it's actually 0.9999999996.
Applying a tolerance of 0.1 (for example) to the comparison of these two values would treat the values as equal.