Precision is the number of digits we can represent accurately.
$1.2 \times 10^8$ - precision is just 2 and rest we have 8 zeroes which might not be accurate.
So, in IEEE 754 floating point representation we have 23 precision bits and we also have one implied bit before '.' making it 24 precision bits. With 24 bits we can represent $\lfloor 24 \log 2 \rfloor = 7$ decimal digits.