Cutting precision holes by hand involves patience. It also involves sharp tools that are appropriate for the job. There are several tools that fit this description. Precision is needed when cutting holes for tenons, dowels or crafts. You can do it if you have the time and the need to accomplish an old-world craft
A bent spoon is a carving tool that resembles its name. It has a semicircular end that is very sharp. It is used to carve round channels in wood. If you spin the bent spoon vertically by hand it will burrow down into the wood. The size of the hole depends on the size of the tool. Use a 1/2-inch bent spoon to cut a 1/2-inch hole. It will carve an almost perfect hole if you have a steady hand.
Forstner bits are actually knives, or blade-type drill bits. They have perfectly shaped horizontal cutters that make the cleanest, most defined holes in the woodworking industry. You can spin it by hand if you want. It will inscribe the lines of a perfect circle to establish further cutting with any other tool, or you can continue burrowing down by hand with it; albeit, it will take time. You can also use a hand-crank old-fashioned egg-beater-type drill as well, coupled with a Forstner bit.
A hole saw is basically a circular saw blade attached to a spindle. It can cut larger holes than almost any other woodworking tool, up to 6 inches or more in diameter. You could also attach a hole saw to an egg-beater-type hand drill to cut precision holes. This has been done for many years by log home builders to cut large holes for round tenons or pegs. Hole saws can also be used to cut holes when building log pole fences in the same manner.
A fine-tooth keyhole saw can be used to cut precision holes. It would probably be the last choice because you need to control the diameter freehand. But if you take it easy, you can do it. It is necessary to cut, punch or drill a small hole just big enough to get the tip of the drill into first, and then you can begin sawing up and down vertically, surgical cutting the hole. To follow up with the precision of the hole, insert a rat-tail or convex file into the hole to finish the sides of the hole.
Technically, a file cannot be used to carve a hole, but it can be used to perfect the hole. A file is the best tool for shaping and perfecting the inside perimeter of the hole. Many files have a semicircular or round profile that is perfectly suited and will match the radius of the hole. Just select the right file. Insert it into any rough hole and file vertically up and down to define and smooth the insides of any hole cut into wood. A file is a favorite among woodworkers for this purpose.