The function of current limiting circuitry is to prevent damage to the IC when an overload is placed on the output of the regulator (the load impedance is too low). Without current limiting, the regulator would source excessive load current and destroy the pass transistor inside the part.
There are many new regulators which have tighter output tolerances (better than 2% is common), achieved through the use of a laser-trim process. Also, many of the new regulators have separate output specifications that cover room temperature/full operating temperature range, and full-load/light-load conditions.
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