I've never heard of this idiom before today and thought it was an especially curious one. What's the origin of calling the cheap seats the nosebleed seats at the theater?
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The idea is that the seats are so high up that you will get a nosebleed from the altitude (i.e. the air is so much thinner). It is an example of hyperbole.
It's an exaggeration of the altitude of said seats. High altitude can cause nose bleeds in some people.