In a nutshell:
Lathe Cutting is a process which utilizes a cutting method to record sound grooves onto a disk.  Lathe cut records are an alternative to the modern practice of pressing records with metal plates.  In lathe cutting a voice coil is used to drive a needle which cuts the frequency into a surface.  This method has long been used for producing lacquer masters, which are then used to make metal plates for pressing.  Most of the machines used for this purpose were manufactured pre-1970. My particular machine was made in the mid-1940s.  In recent years many have begun experimenting with using these machines to produce limited edition, unique records out of unorthodox materials such as plastic picnic plates and plastic disks.

For more in-depth information regarding lathe cut records I encourage you to check out the Lathe Trolls forums. They possess an incredible wealth of information regarding both mastering proper and experimental endeavors and everywhere in between.