A smaller LSB can reduce the exact reconstruction error. Exact arithmetic here means exact results for the stated model inputs; measured inputs still carry uncertainty and significant-figure limits.
highlighted = computed this step
A one-volt LSB leaves half a volt of error
Input 11/2 volts reconstructs to 5 volts on the coarse ladder.
211V−5V=21V
A half-volt LSB can hit the same input exactly
With LSB 1/2 volt, code 11 reconstructs exactly 11/2 volts.