That phrase, "Consistently exceeding tolerances" shows up in both the PTS and ACS under paragraph titled "Unsatisfactory Performance".  It's kind of a catch all for saying "sloppy flying is not allowed".  In my 14 years giving check rides, sloppy flying really hasn't been an issue.  Sure, you might see a pilot slip up a steep turn and climb a 125 or 150 feet but they usually make an immediate (smooth but positive) correction and the pilot doesn't allow the error to happen again.  For the most part, that's still exceptionable under the PTS/ACS.

But what about the pilot that constantly allows errors to occur?  Say an Instrument pilot with altitude problems?  Up 150 feet, down 150 feet, up 200 feet, down 100 feet, down 200 more feet.  Is that allowable?  How about a multi engine pilot that allows the airplane to climb or descent 500 feet and allowing the heading to change up to 90 degrees while handing an engine out procedure.  Is that allow able?  The short answer in both cases is "NO"!

Like I said earlier, this hasn't been really a problem on check rides, until just recently (last 6 months or so).  With one instrument applicant I recorded 12 altitude deviations more that 150 from the assigned.  Two of those deviations where 300 feet (PTS/ACS is within 100 feet).  Another Instrument applicant allowed his heading to wander plus and minus 30 degrees (It was enough for ATC to notice and offer no gyro turns).  The example of the multi engine pilot above has happened 3 times.

For a Pilot Examiner they could just chalk up these errors on the Notice of Disapproval as "failure to maintain tolerances". However, these errors are usually an indication of a deeper underlining problem.  For example, the instrument pilots they most likely never developed a good instrument scan.  Or in the case of Multi engine pilots, the failure to prioritize flying the airplane first and handling the problem second.  All of these issues really boil down to a lack of basic airmanship.

These pilots where able to complete their check rides after some additional training.  In one case it just took 2 more hours, in another, it took more that 10.  It doesn't matter how much time it takes, what matters is they are better, safer pilots in the end. 

http://www.aopa.org/AOPA-Live?watch=%7B06DD5B79-2985-4810-BB90-435B64EF3B3E%7D