That is a fairly complicated issue jonesy, and you would get a better answer from an experienced, qualified machinist who uses an indicator several times every day. I'll just outline where I am on the subject in the hope that will be better than no information at all.

First, I think unless you are something like a vintage car restorer, there isn't much point in buying imperial instruments these days, they are the past not the future. On the other hand of course if you have an imperial machine, it may be that using a matching indicator will make it easier to avoid translation errors.

Second, to me the current digital instruments tend to be superior to mechanical ones in accuracy but they may be less reliable, and probably will be scrap when a minor fault develops. Also, their mechanical interfaces seem usually to be tin-pot compared with purely mechanical instruments. All this will change eventually, but so far I seem to be seeing plastic bits used as guides and bearings, and pieces of equipment that are not all that oil-proof or scratch-proof.

My personal approach is to keep a small range of indicators that I've had the opportunity to buy cheaply, or have inherited. Essentially there are two generic types of mechanical indicator: plunger type, and lever type. Here are examples of both.

Plunger type:
[Linked Image]

The plunger type usually has long movement (though of course the one in the picture doesn't, for reasons I'll get to in a moment), and usually has a large dial that is easy to read. Unfortunately they are prone to sticking, and as they get older you have to warm them up by gently working them through their full stroke a few times before you use them. I have to keep several of them, and put them aside when they are a bit sticky, then clean and oil them when I get time, so they can go back into service. The longer movement indicators have more potential to stick than the shorter movement ones.

Another weakness of the plunger indicators is that because of their high-ratio gearing, they have inertia effects. They will not follow even a very slowly moving surface at all well, and will quickly be worn out or damaged if you try. Essentially, they are fairly tricky to use, and have to be handled carefully and not trusted.

Lever type:
[Linked Image]

The lever type used to be the favourite of machinists who use them constantly for setting things up to run true. They can only operate through a very, very small range of movement, but within that range are rather reliable. Of course a decent machinist who is setting up a job gets it pretty close to true just by eye, and only uses the indicator for the last detailed adjustment, so this can work out quite well.

Magnetic bases are another can of worms. Here are the two I use, one a typical "bought one" and the other a simple home made device that cost nothing and is probably worth what it cost, though it is far more stable than the bought one:

[Linked Image]
[Linked Image]

Essentially, bases always have some spring in them, and the more sliding joints they have, the more slack and the more opportunity to slip. Also, they are only as stable as the base they sit on, so you need to clean the surface you put them on rather well. Even after doing all this, I find the stand is usually too springy for the readings to tell you anything at the thousandths of an inch level, through a movement of tenths of an inch. It seems to me that good machinists use clamps, not magnetic stands.

Having said all that, the standards that a good machinist expects and achieves are probably out of the reach of mere mortals - they are certainly a long way out of my reach. Home enthusiasts usually apply different standards, and in my case, struggle to achieve those.