Let [tex]f(x) = \sqrt{1+x}[/tex]. Let [tex]-r<x<r[/tex] ([tex]0<r<1[/tex]). The Taylor Series of [tex]f(x)[/tex] centered at 0 is:
[tex]1 + \frac{x}{2} - \frac{x^2}{4}+\frac{3x^3}{8}-...[/tex].
The Lagrange Remainder as you posted is,
[tex]R_1(x) = \frac{f''(y)}{2!}x^2[/tex] for some [tex]y[/tex] between [tex]0[/tex] and [tex]x\not =0[/tex].
Now,
[tex]|R_1(x)| = \left| \frac{f''(y)}{2!}x^2\right| \leq \left|-\frac{1}{4} \cdot \frac{(1+y)^{-3/2}}{2!}\right|r^2\leq \frac{r^2}{8}[/tex]
The term [tex]\frac{r^2}{8}[/tex] determines the accuracy. Say we want your approximation to work for 2 decimal points then we require that [tex]\frac{r^2}{8} \leq .009[/tex] thus [tex]r\leq .26[/tex]. Which means if you pick a fourth, that is, [tex]r=.25[/tex] then on the interval [tex](-.25,.25)[/tex] your approximation must be accurate to at least two decimal places.