Increased Accuracy is the first upgrade of Path 1 for the Mortar Tower in BTD5. In BTD4, it is called Greater Accuracy and it is the first upgrade.
It shrinks the target, allowing the mortars to direct their fire more accurately. This is an extremely useful upgrade, as it almost entirely prevents the Mortar Tower's shots from strafing off target. The upgrade makes the target almost 2x as small, because it decreases the target size by 70%, in BTD4 and BTD5.
The circle in the middle of all "target circles" of the Mortar Tower represents the whole possible areas where the center of the explosion may hit. It may hit closer to or further away from the complete target center, but will not stray away from the target circle in the center.