We analyze the sources of error in quantum embedding calculations in which an active subsystem is treated using wavefunction methods, and the remainder using density functional theory. We show that the embedding potential felt by the electrons in the active subsystem makes only a small contribution to the error of the method, whereas the error in the nonadditive exchange-correlation energy dominates. We test an MP2 correction for this term and demonstrate that the corrected embedding scheme accurately reproduces wavefunction calculations for a series of chemical reactions. Our projector-based embedding method uses localized occupied orbitals to partition the system; as with other local correlation methods, abrupt changes in the character of the localized orbitals along a reaction coordinate can lead to discontinuities in the embedded energy, but we show that these discontinuities are small and can be systematically reduced by increasing the size of the active region. Convergence of reaction energies with respect to the size of the active subsystem is shown to be rapid for all cases where the density functional treatment is able to capture the polarization of the environment, even in conjugated systems, and even when the partition cuts across a double bond.