Your carbohydrate tolerance is an absolute amount of carbohydrate. The carbohydrate you eat is chopped up into its component glucose molecules by your digestive system. This glucose gets shunted to your pancreas and liver by way of the portal vein. The pancreas senses the level of glucose in the bloodstream and, if necessary, secretes insulin to get it out of there (glucose above a certain minimal level can cause serious damage, even death). The insulin forces the muscle cells and the adipose tissue to absorb as much glucose as they can (the liver turns the glucose into fatty acids for storage in the adipose). As the muscle and fat cells reach capacity, they down-regulate their insulin receptors, the result being that it takes a higher level of insulin in the blood to force them to do their jobs. (This is called insulin resistance.) Chronically elevated insulin levels also cause damage throughout the body.
The cure is to avoid eating carbohydrate above the level that stimulates an excessive insulin response (we do need some insulin, or we will starve to death.) On the Ketogenic Forums, we recommend eating no more than 20 g/day of carbohydrate, because that is a limit low enough to get everyone into nutritional ketosis. (There are a few exceptionally insulin-resistant people who will need to eat even less carbohydrate than that.) Your carbohydrate tolerance may actually be higher than that, but a 20 g/day limit will get you into nutritional ketosis, and once you become fat-adapted (a state in which your muscles burn fatty acids for their energy, in preference to glucose—takes around six to eight weeks to get there), you can experiment to find what your actual carbohydrate threshold is.
Since we don’t know how many calories your body wants for healthy functioning, we prefer to express the limit in grams instead of as a percentage of calories. (Twenty grams of carbohydrate is 80 calories, and 80 calores is 5% of 1600, but only 4% of 2000.)