This article is from the Misc Bicycles FAQs, by various authors.
One of the last parts of finishing off the frame is to face the steerer
tube. The steerer tube was left a little long to provide some area for
brazing. This extra tube needs to be cut off and the lugs faced,
meaning providing a smooth, parallel surface for headset crowns. The
excess tubing is cut off with a hacksaw. To face the tubes, a process
similar to the facing of the fork crown race is done. The one big
difference is that the cutting head has three blades - a reamer to
smooth the interior surface, and then a double blade facing the lug, the
second blade providing a little lip. The cutting tool is fit in, a
graduated cylinder is placed in the opposite end of the steerer tube to
square the cutting tool, then a spring, spaces, and finally a bolt to
provide tension in the spring. Again the tool is cut with by turning a
handle clockwise until you have a smooth surface. This process is done
on both ends of the steerer tube.
The seat tube is also reamed is a similar manner to what was done to the
steerer tube and for the same reasons. They have several different
reamers for this for different size seatposts.