When a bottle cap diameter is read as 3.12 cm, a calculator can produce many digits after the area is calculated. The measuring tool does not justify all of those digits. This is why we use significant figures.
Significant figures are the trusted digits in a measurement. The last digit is usually an estimated digit, meaning it is still reasonable based on the measuring tool.
For multiplication and division, the limiting value is the smallest number of significant figures among the measured data.
Suppose a rectangle has width 12.455 cm and length 35.2 cm.
A=l×w=35.2 cm×12.455 cm=438.416 cm2→438 cm2
The value 12.455 cm has 5 significant figures, while 35.2 cm has 3 significant figures. Therefore, the area is reported with 3 significant figures.
For a bottle cap with diameter 3.12 cm, constants such as π and 41 do not limit significant figures because they come from the formula, not from a measuring tool. In this example calculation, π is approximated as 3.14.