Accuracy may be given as a SD ~ almost (but not exactly) 50% of missiles will pass in a box of this height and width (69% for each separately). By roughly 3x this dimension you can expect 'around' 95% of correctly functioning missiles will pass inside the 'box'.

The target has non-zero dimension. Even with a contact only fuse you would see detonations at non zero miss-distances as the rule, rather than exception. Miss distance being the deviation of the impact from either the aim-point or target centroid.

Setting warhead size, and fusing radius to around 3SD, plus a little for target dimension maximises utility of the system accuracy without unduly reducing missile performance, increasing overall size and weight or having ineffective 'fusing events', or unfused 'lethal-distance' misses.