I'll be using a flat watch glass for the back section which is quite a bit smaller, in diameter, than the front watch glass. First, though, I cut the back ring diameter to match the middle watch section.

To set up the lathe to cut the outside of the ring. I've raised the ring off the back clamps with a ring to prevent the cutter crashing into the clamps.

To set up the lathe I first position the cutter at the front face and zero the lathe axis

.

I do the same thing again but with the cutter against the outside edge of the ring to zero the other axis. Then shave off incremental amounts of material until the diameter is correct

.

Once done I measure the diameter of the back watch glass and calculate how much metal to take off the ring, and to what depth

.

The ring goes back on the lathe and the space is cut

.

Once cut to just less than the diameter of the watch glass I try to fit the glass

,

but it didn't go in first time. That's OK I know it's not too far off. I put the ring back into the lathe and grind off some more material with some wet'n'dry paper

.

This really just polishes the metal, only taking off a tiny amount. If I had needed to cut off much more material then I would need to use the graver, however for this, the piece would have to be re-positioned into an independent chuck and then centred using a dial gauge.

Fortunately I had cut off enough material and the polishing was sufficient to make the glass fit

.

I had thought, with my comment here, that a rougher cut may be advantages to holding the watch glass in place. I'm not too convinced now, in retrospect. The fit is very tight and the glass itself is ground on the edges for a slight friction fit. I think any roughness in the metal would just compromise the water-tightness of the final watch.