Azeotrope
Also known as: azeotropic mixture, constant-boiling mixture
Distillation works because the vapour above a liquid is richer in the more volatile component. An azeotrope is the point where it stops being richer — the vapour has exactly the same composition as the liquid it came from. And there the separation ends.
For ethanol and water this falls at about 95.6% by weight, roughly 97.2% by volume. Such a mixture boils at 78.15°C, lower than pure ethanol, which needs 78.4°C.
Past that point you can distil as long and as carefully as you like — the composition will not move. It is a physical barrier, not a question of column quality or patience. Which is why commercial rectified spirit is 95–96% and not a drop more.
Industry gets round the azeotrope, but not by distilling. It uses molecular sieves — a porous material that traps the smaller water molecules — or adds a third substance that shifts the equilibrium, or separates through a membrane. That is how 99.8% anhydrous alcohol is made: not for drinking, and not achievable at home.