Hi Kobe
This is quite a big topic, but the short story is coverages come in two flavours - having single or double precision coordinates - and use the concept of a fuzzy tolerance when geoprocessing against other coverages - coordinates within the tolerance of each other are considered identical. Shapefiles are always double precision and have no concept of control over coordinate comparison tolerance - don't use them. Geodatabases use a storage resolution for their features and an additional XY tolerance you use to model the accuracy of the data when making coordinate comparisons. Because much geoprocessing functionality depends on coordinate comparison geodatabases are the recommended storage workspace for your data.
Regards
