The long travel indicators come with 10% back lash built into them, plus there lateral movement in the stem. A bad setup all the way around. They do sell jeweled long ravel indicators (usually .250" of travel) that have about 1/5th the backlash. Yet are pretty expensive when compared to those Chinese indicators. Also the use of ball bearings is nice, but if they move, they add backlash (error). A typical wand type indicator (not the high end ones) will have about two percent or less backlash. The high end ones are zero backlash (Interrapid and B&S Best Test).
The idea is to have the least amount of movement in the setup. That way they error is in the case and not a combination of both. By the way you can build one better than 99% out there for less than $60 and the indicator.
gary