A tardigrade is under a millimetre long, has eight legs and lives in moss, sediment and leaf litter. It became famous for surviving exposure to open space during a 2007 European Space Agency experiment. The framing of "the toughest animal on Earth" gets the mechanism backwards.
The tun state
When its environment dries out, a tardigrade pulls in its legs, expels most of its body water and contracts into a barrel-shaped form called a tun. Metabolism drops to a level that is difficult to measure at all. In this state it is not resisting stress; it has largely stopped being a running biological system, and a system that is not running is much harder to break.
What replaces the water
Losing water normally destroys a cell, because proteins unfold and membranes collapse without it. Tardigrades produce intrinsically disordered proteins that vitrify — they form a glass-like matrix that physically props up cellular structures where water used to be. Some species also make a protein called Dsup that binds to DNA and appears to shield it from damage by hydroxyl radicals, the main way radiation harms cells indirectly.
The limits are real
An active, hydrated tardigrade is not especially hardy. It can be killed by heat, by drying too quickly, or by ordinary predators. The extremes it is famous for — vacuum, radiation doses far beyond human tolerance, temperatures near absolute zero — are survived almost exclusively in the tun state.
And survival is not the same as thriving. In the ESA experiment, most of the animals exposed to the full solar ultraviolet spectrum did not recover.