Here is the documentation regarding loiter tuning:
Loiter Mode — Copter documentation (ardupilot.org)
What GPS are you using? What fix type are you achieving? RTK Float can be imprecise on the order of meters depending on the proximity and quality of the base station solution.
Geodetic coordinates to 7 decimal places are precise to approximately 1cm. I doubt it’s practical to even try to hold millimeter precise position on any air vehicle (in other words, 7 decimal places is a reasonable practical limit).
You can force the EKF to use GPS altitude rather than barometric altitude to tighten vertical positioning. I would not use this method without the expectation of a reliable, continuous RTK Fixed solution.
Using GPS for Altitude Sensing — Copter documentation (ardupilot.org)
Here is a good discussion regarding practical limits:
Chasing better accuracy - Blog - ArduPilot Discourse
I don’t think you’ll find much discussion of expected loiter mode precision because it is nearly impossible to set a reasonable expectation across the wide array of vehicle types and hardware covered by the ArduPilot ecosystem.