a typical gear and rack dial indicator is certified with 10% backlash in them. At onetime there wwere a few made in the quarter inch and hundred thousandth travel areas that were jewelled. These were very expensive and hard to come by. Have not seen a new one in a long long time, and still had about two or three percent lag built into them. The spring that pushes the anvil would be a race hemi valve spring, but you still got the backlash. Now of course you could opt for one of the indicators that uses an encoder inside it to read anvil movement (some will call it stem movement). These are very precise in measurment of travel. There is another issue with them that I'll go into later. For seriously precise measurment you always use a wand type indicator. Everything is pretty much direct coupled in them and even a bad one will come in at about two or three percent lag. A typical Best Test or an Interrrapid are certified as zero backlash. On the otherhand a good quality Federal that reads in one tenth increments will still show up well under two tenths backlash. When you move past the wand type indicator you usually look at lasers or air gauging. The next step after than is an auto columator that reads in arc seconds. One normally will use an indicator that reads in one tenths when working down to the two thousandth range or less to be a little more precise. If he's working close to the one ten thousandth area he probably will opt for a fifty millionth indicator (one half a ten thousandth) because the percentage of error is smaller in actual numbers. I get by very well with a couple five tenth indicators, but own several one tenth and a couple fifty millionth ones. That's why a NECO gauge comes with a one thousandth GEM indicator instead of some sort on long travel device. (I use .0005" indicators).
Now I must make an addendum to the jewlled indicator comment. I forgot all about Rhan. They manufacture surface plate upkeep equipment and extreme measuring equipment. They do make and sell a jewlled ruby tipped twenty millionth and one with an encoder in it. Pretty expensive, and carry a one percent error factor. Not made for the average guy to use.
gary