How to "tailor" the statement of purpose for a particular grad school
I have been involved in graduate admissions for a quite a few years. Answer below is based on that experience.

This question about fit is a way to make sure that you know approximately what you are getting yourself into.

You do not have to stroke professors' egos by telling how great they are. It does not help your application. If you have interest or past experience in some area, mention it of course, but do not engage in gratuitous flattery. Instead we want to know why this school is suitable to you at all. For example, if you are interested in doing mostly algebraic geometry, but are applying to a department that has no algebraic geometers, this would be a poor fit. If there is a reason you like the location (e.g. a significant other working nearby, or cheap flights home), it does not hurt saying so either.

What we want to avoid is to have a 3rd or 4th year graduate student drop out because they cannot find an advisor in their preferred area, and are utterly unhappy because of location or because of something else.

In general, the statement of purpose is your opportunity to present evidence that you will make a good researcher one day. That includes your scientific background, various personal traits as demonstrated by your past, and your accomplishments. See an excellent answer to another question by JeffE for more details.