Sorry to be thick, I just never new what to do or ask for and I have a project that needs this. (New barrel fitted to action)
Starting with this for a reason - we don't know anything we haven't yet learned, and we can't know it. Ask the questions, learn it, then you'll know.... "ignorance" isn't "thick," and you've always seemed anything but "thick," as you seem to ask good questions when you don't know and seem to absorb and understand information very readily. You might be a lot of things, but "thick" isn't one of them.
I assume they cut the chamber and so forth so that it will fit the round you give them and clear all the way to the lands regardless of how long the OAL is??
Yup - that's the idea. The chamber can be whatever you want it to be - it's just a fancy shaped hole drilled into a piece of pipe. What gets complicated is the determining the exact "fancy shape," and determining whether an existing pipe can be redrilled with said shape.
I have often heard of this but didn't fully understand. What is unclear is the dummy.
This is a common "cloud of mystique" for folks who haven't been down the road before. THIS is why you hear so many guys say your first step should be to find a smith and discuss your needs with them. (This paradigm is shifting away, it's a better process, but too many dumbasses think they can go online and learn as much as a tenured professional smith, then just pay a wrench jockey with a lathe to do their barrel install.... So the advice you find online these days tends to be foolishness which typically starts with the cartridge, instead of "find a good smith to figure out what is best for you").
Your smith will listen to your desired application, or help you better define it if you aren't quite yet sure what you want. Then they'll identify bullets capable of the task, and the required velocity to accomplish it - this dictates the cartridge case you need to put behind the bullet to hold the powder and pressure required to hit that velocity. It also tells them barrel length, twist, and throat/freebore design they need. Either you or they will produce a dummy round (or print thereof) to establish their critical dimensions for the reamer. With many smiths, they'll already have been down the same path, so they'll have a suitable reamer which is proven, on hand. For one of my specialty pistols, I had a 6XC in mind, but after discussing with my smith, I came around to the 6 Dasher as a more efficient option. It's a long range target and coyote hunting pistol, a custom Remington 700 repeater, rear grip, so once we landed on 6mm Dasher (something I'd shot before) I knew I wanted to shoot the 105 VLD Hunting and the 105 Hybrid with a no-turn neck (Lapua brass), and push them as hard as the little case can muster, so I made a few calls, these are common enough bullets, the reamer already existed and life was simple... Quickload showed 15" would get where I wanted to be, so the barrel blank was ordered and it came out performing exactly how I wanted it.
There are also often multiple answers for any given question (shooting application), so multiple cartridges might meet the need, and multiple bullets. A guy should also be cognizant of the corners into which they paint themselves - as picking very specialized bullets for a specific application might leave you with a headache for other rounds. Consider how much playing around you might do, vs. how dedicated you are to ONE bullet. I have a Krieger barrel throated for the 90 Berger - it'd be a LONG jump to the lands if I ever wanted to shoot 45grn pills out of it! But I didn't build it for that, and won't ever shoot them, so it's moot.
I assume you assemble this dummy based on what is most accurate with regard to how far from the lands the bullet is...but how do you know this if it doesn't fit the chamber as it is, and you are going to have it recut?
No, none of this. See above. The dummy is based on the case the guy wants to shoot, plus the bullet, plus the velocity they need to achieve, plus the mag box, if running a repeater. For us repeater shooters, we have to fight performance limitations in deference to mag length for some rounds - aka, I really like the 75 A-max/ELD-M, but it can't be ran in an AR-15 mag, so I don't throat my barrel for it.
Having an existing barrel rechambered or rethroated is a different game than having a new barrel chambered. Rethroating LONGER is typically easy, as only a throating reamer is needed and no other part of the chamber is affected. Cutting an entirely new chamber might not be possible for some cartridge swaps in some barrels, i.e. converting a 300wsm tapered sporting barrel to a 300wm chamber, as there won't be enough barrel left after cutting away the entire chamber section to fit the new chamber and have sufficient shoulder. Alternatively, going 300wm to 300wsm might work pretty easily, since the shoulder can move forward only slightly and still cut the entirety of the chamber with minimal barrel set back. Rethroating to a SHORTER throat, aka, making a Weatherby have a normal throat, similarly requires the entire chamber to be recut, but only slightly moving the shoulder forward enough to reach metal throughout the new chamber. Cutting a chamber in a new barrel is essentially free game.
For this particular case, the OP knows what bullet he wants to shoot, but it also sounds like he might run factory ammo, so he might have to compromise on a little shorter throat than he could otherwise have OR run a longer jump with factory rounds and maybe suffer some precision loss.
The bullet might not let a guy seat it to mag length, so that's not always the "easy answer" it might seem. A guy can't seat a Dasher to mag length - period - the bullet wouldn't even be touching the case mouth. On the other end - I mentioned the 75 A-max above, it's seated too deeply in the case when ran at mag length, so the ogive is seated below the case mouth, running the risk of the bullet falling into the case (same issue I have with 180gn SSPSP's in my 357/44 B&D if I don't trim the meplat). Long ogive, long boattail bullets have short bearing surfaces, which limits the range of seating depth... It sounds more complicated than it is. I basically pick my bullet, measure my bearing surface length, try to get either 1 full diameter or a full neck (for short neck cartridges) of contact, then look at how that fits into the magazine, if it doesn't feed and doesn't have any room to go deeper, I gotta pick a different bullet or different cartridge (eg 6.5 creedmoor vs. 260rem), or swap to a long action (i.e. 6.5-284).
Again, it all sounds far more complicated than it really is. Get the bullet, figure out how long it could be seated, figure out if that fits in the mag or not... If yes, find a reamer. If no, figure out if it can be seated deeper... If yes, find a reamer. If no, find a different cartridge, bullet, mag length, or action length... that simple...