Counterbores

A counterbore is a cylindrical flat-bottomed hole that enlarges another coaxial hole, or the tool used to create that feature. A counterbore hole is typically used when a fastener, such as a socket head cap screw, is required to sit flush with or below the level of a work piece's surface.
Whereas a counterbore is a flat-bottomed enlargement of a smaller coaxial hole, a countersink is a conical enlargement of such. A spot-face often takes the form of a very shallow counterbore.
As mentioned above, the cutters that produce counterbores are often also called counterbores; sometimes, to avoid ambiguity, the term counterbore cutter is used instead.

A counterbore hole is usually used when the head of a fastener, such as a hex head or socket head cap screw, is required to be flush with or below the level of a work piece's surface.
For a spot face, material is removed from a surface to make it flat and smooth, usually for a fastener or a bearing. Spot facing is usually required on work pieces that are forged or cast. A tool referred to as a counterbore is typically used to cut the spot face, although an end mill may also be used. Only enough material is removed to make the surface flat.
A counterbore is also used to create a perpendicular surface for a fastener head on a non-perpendicular surface. If this is not feasible then a self-aligning nut may be required.