The material that is removed is the face between the case and the cylinder. this will lower your timming some which can be corrected by re machining the ports. Lowering the cyl makes the piston tighter at the top also. What you do is measure the stock deck, then decide what you want it to be using the right gasket, face off the case the difference, raise your ports the same amount. All works out good in the end. You do need to do this on a good mill and have the skill to measure correctly with the right tools. It is very fun to play with these small engines like this.

edited cause I cant spell or type well