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The annular ring is the copper donut around your drilled hole. Size it too small and you've handed your fab a problem they'll solve with your money.
A tight annular ring leaves almost no room for drill registration tolerance. Fabs compensate by slowing down, using premium tooling, or rejecting the job outright. Some just quietly add a surcharge. Either way, you're paying for a design decision that took five seconds to make and five seconds to fix.
The fix: Use a minimum 5mil annular ring for standard PTH components and vias. For Class 2 boards, aim for 7mil or more. The extra copper costs essentially nothing. The yield improvement is real and measurable.
This is one of those changes that takes 30 seconds in your design rules and pays off on every single board run after that.
Don't make your fab fight for yield on your behalf. Give them room to work.