This page and its pictures are almost entirely thanks to CNC gunsmithing. I did look for information in other places and I even have tool and die makers in the family, but for a online reference about machining gun parts you can't beat that site. You should also make it your first stop for learning about 80% lowers
Aluminum billet. It is destined to become an AR-15 lower (Photo courtesy of cncguns.com)
The lower taking shape(Photo courtesy of cncguns.com)
Billet is just a fancy word for block or chunk. Technically, to be classed as billet, its cross section can't be above a certain area, but in reality any block, cube, round stock or whatever of a metal is usually called a billet.
The simple answer is material is removed from the block until the only thing left is the lower. The tolerances needed for the other parts to fit means that it has to be done by a CNC machine. It has to be done in several processes.
First the outer billet needs to be milled away to make the shape of the lower, then the magwell, receiver extension hole, drift pin holes, mag release area and hole and trigger group area/holes etc need to be milled and/or drilled and tapped. The CNC machine does a lot of the work, but it is not a single step, fire and forget for the machinist. Depending on the machine, he (or she) has to rechuck and retool multiple times. In the description at CNC guns, it takes 9 separate operations to complete 1 lower.
I for one, marvel at the fact that a piece of American art, skill and ingenuity can be sold as a lower receiver for less money than a pair of jeans made in China.
At any rate, once all the material is removed, you have an silver colored lower. Some call it a raw lower, some say it is "in the white" and the straight talkers called it "non-anodized". At that point, makers have a few coating options. The standard is Anodizing, but there is NiB, NP3 and others. And then there the full badass 2 tone spash anodizing. I have not seen it for sale, just on CNCguns.com, but I would gladly own a receiver set.
2 tone spash anodizing. Want one? go here and beg. With money. (Photo courtesy of cncguns.com)
A billet lower about 80% complete. Note the trigger area is not milled out (Photo courtesy of cncguns.com)