Question

Why is it incorrect to think that the more digits you represent in your answer, the more accurate it is?

Answer 1

Because your answer is as accurate as the data you use. For example, if you measure distance with three significan digits, for example:
3.23 m, 3.25 m, 3.28 m, 3.56 m, 3.65 m
and you obtain the average of the data, in this case, 3.394 m, the correct form is 3.39, because you cannot be more accurate than your data.