Your data has an accuray of 1 cm. With this accuray I would not use a x,y tolerance of 1 cm. During feature processing operations coordinates that fall within the x,y tolerance will snap to the same shared coordinate location. The maximum distance a coordinate could move to its new location is the square root of 2 times the x,y tolerance. If you use a x,y tolerance of 1 cm the maximum distance a coordinate could move is 1.4 cm. So the coordinates will move more (1.4 cm) than the accuray (1.0 cm) of our data. This image from esri help shows how coordintes will move:
I would use a tolerance of 0.1 cm.
The x,y tolerance should be coarser than the resolution. In ArcGIS the default value esri uses for the x,y tolerance is 10 times x,y resolution. If you use a tolerance of 0.1 cm you shold use a resulution of 0.01 cm.
(It is possible to use every value as tolerance and resolution (e.g. 0.5, 0.12345, 0.99 ...). But I like to use a resolution of 1.0, 0.1, 0.01, 0.001 ... This makes it more easier that the resulution grid of different projects (with different resolutions) fits together.)
Summary: I would use a x,y tolerance of 0.001 m and a resolution of 0.0001 m.