Is this actually what the do with toleranced passives and at what tolerance do they stop taking the cream out of the middle. In other words does a 1% batch have the 0.1% range taken out and so on up to their tightest tolerance range?
I don't think the production is that precise.
I imagine there is a target value for a batch, let's say 47 kOhm. Let's say they sample test 1% of the batch, and the measured resistance values fall between 45,500 Ohm and 48,800 Ohm. Welp, that's a 47 kOhm ±5% batch. They try another batch, and this time the measured resistance values fall between 46,900 Ohm 47,250 Ohm. Alright, that's a 47 kOhm ±1% batch. They try another, and this time the measured resistance values fall between 49,100 Ohm 52,250 Ohm. Fine, 51 kOhm ±5% batch.
You would think (hope) the manufacturing process itself on a given day would yield results well within 5% of the target value. So the variances would more likely come from the individual materials used to make the resistors. Each yield probably produces hundreds of thousands of units at least, so bin sorting the full yield would be incredibly impractical.