What this means is that if a constraint or load acts over a small portion of a part undergoing elastic deformation the effect of that constraint or load in producing high stresses will be very localized.
Two things must be true:
1. The load or force must be very localized. (Like the end of a piece of structural steel welded to a block.)
2. The part must not otherwise be expected to experience plastic deformation.
Just how far from the constraint or load point the high stresses can be expected to have "died out" is a matter of engineering judgment.
It is also clear that in using this principle the mesh must be refined enough at the location of the constraint or load application point to allow the stress to "die out" naturally. This is more of a problem when using lower order elements. (Draft mesh or coarse mesh)
