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A position accuracy of Approximate reports that you may not want to fully trust the positions reported, as the position is inferred or synthesized in some way, such as the controller leaving the sensors' field of view and forcing the API to rely on the device's IMU instead of visual tracking.
Approximate is never reported for hands (see InteractionSourceKind and InteractionSourceHandedness on InteractionSource), as their positions are only ever reported during visual tracking. If you are making an experience that requires high position accuracy, such as a painting app, you may want to rely on positions reported with High accuracy and discard anything reported as Approximate. For simpler operatons, such as pointing at UI with the interaction source, Approxmiate is generally reliable enough.