A rubbed in jewel is a jewel that is mounted in a recess in a plate/bridge and that has a small lip, formed out of the plate/bridge that is folded over the edge of the jewel to keep it in place.
This was very common on old swiss movements, but you don't see it in newer watches.
The jewels that were rubbed in were often more pink than rubie colored and also a bit thicker. You can spot a replacement very easily if the jewler rubbed in a newer jewel as a replacement.
The rubbed in jewel can be replaced and a new rubbed in jewel can be inserted but not too many times. Sometimes you find a fix where a watchmaker replaced a rubbed in jewel with a friction fit jewel.
There were some sets of special tools used. You still find them on auction sites. Typically they come in set of three and one set is used to open and prepare the hole and the other is used for closing the lip around the jewel.
The other way to do the folding is to mount the plate in a lathe and turn it, centered around the jewel. The lip is then closed with a special smooth tool while the plate is rotating. This is somewhat similar to metal spinning..........
Skutt50 is correct regarding the way the jewel is fitted, also the jewel is different in side shape to a replacement friction fit Seitz product.
In relation to Swiss watches it was used regularly as Skutt50 has said, but with regard to you do not see it in newer watches it depends on how new and what make. It was also common in American watches, even when a setting was used, as the jewel was fitted the same way to the setting
I have two tools about which I would like to know their specific name and their purpose. If someone is familiar with these, I would appreciate hearing from you. ...6 cutters in a wood tube....first three photos.. ...leatherette box with tools...last four photos.... The knurled knob is threaded...