From Connie G. Thomas,
Your Guide to Cross-Stitch.
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Definition: Tension is a term often used to describe the tightness of a stitch. A cross stitch should be tight enough to lay flat on Aida fabric but not so tight that it distorts the weave of the fabric. The tension of the stitch is determined by how hard the stitcher pulls against the floss when making the stitch. Each stitcher must determine the proper tension for his or her stitches.

Tension is also used to describe the tightness of the fabric in a hoop. The fabric should be tight enough that it does not sag in the middle, but not so tight that it distorts or damages the fabric.