That's what I do and it works great. For example, when planning for 20mm diameter knobs, create 20mm circles. I use the "center on axis" buttons (for both X and Y) and then the move function and input the drill tool measurements - one of the axis (Y maybe?) is flipped on AI so you need to change it from plus to minus or the other way, but otherwise it's pretty straightforward.
I would add some extra margin to be sure, but they give something like +/- 2mm or something like that for their accuracy. In practice it's usually been better than that for me, but for something special like LED's in someone's eye or something you might have to be careful and design it so that the tolerance is acceptable.
Not the greatest example picture, but you can see that the text worked out very well with the knobs (which are placeholder, the I need gold ones instead).