Spend a few hours searching and reading...when getting sucked into a new hobby, the information becomes addicting pretty quick!
Short answer: 265 / 75 / 16 tires is about a 32 x 10.5 R 15 is what you can fit with a stock 00-04 Xterra and still be able to flex your suspension all the way through. A 2" body lift allows you to fit a 285 / 75 16 or a 33 x 12.50 R 15. This is on stock back spacing rims. Spacers...as in wheel spacers...will push your tires out further from the vehicle, which make it harder to clear wider tires in the turning arc.
Why does a PML not increase your room for tire clearance?
This gets into the details of a suspension lift vs. body lift. Your stock suspension flexes up and down in the front. It bottoms out / tops out at an upper bump stop and a lower bump stop. These stops prevent you from flexing your tire too much (to avoid hitting fenders, to prevent extreme suspension angles, etc)
When you do a suspension lift, you are just changing the "static" position of your suspension components / tire to make it sit higher at the normal ride height. On off camber hills and on uneven terrain, the suspension and tire will still flex into the exact same position it was at the stock height. So if you put a bigger tire on with the PML, vs. the same tire with stock suspension: you will clear the larger tire at normal ride height...but once you flex the tire, you will hit what you would have hit without the suspension lift.
A body lift spaces the entire cab upwards 2 inches off of the frame...without changing the position of the suspension. That means that when your front tire is completely stuffed upwards to the bump stop...the fender sheet metal is 2 inches further away from the tire than it was without the body lift. It moves the body and cab away from frame and suspension. That relative offset is what allows for larger tires that will still clear at all all suspension flex positions.