What I mean by "stretch" is that even if you put in your best possible application, it's still unlikely you'll get in (or to put a positive spin on it - you still have a small shot). In other words, it's still entirely possible you could get in, but unlikely.
I still encourage people to apply to 1-2 "stretch" schools because you never know. But to go into the process with realistic expectations, and then to focus on "sweet spot" schools where with a solid application, you'll have a reasonable shot of getting in (without needing luck i.e. if you get dinged, consider it bad luck as opposed to bad execution on the application).
Ultimately, if given the choice between a stretch school vs a sweet spot school, you'd probably rather go to your stretch or "dream" school, but it's unlikely going to make a material impact over the course of your career because it still comes down to you as an individual -- there's a reversion to the mean for most people where their level of external success is mostly a function of their own individual efforts and individual luck (being at the right place at the right time).
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