Lego bricks are made to 1um tolerance (1 thousandth of a millimeter). The reason they have to be is to make sure that larger models fit together properly.

The "not too loose, not too tight" thing is part of it, but isn't actually the key reason which is "accumulation of tolerance". Imagine two rows of 100 bricks. The difference in length between the two rows is 100 times that 1um tolerance. If the tolerance was less good, things wouldn't fit together well.

Lego model design guidelines actually have a maximum size of a "fully" connected block of bricks because eventually even this precise manufacturing can't cope. Really big models have purposefully designed decoupling between sections.