They are machined out and sit down as an inlay. DOB card says inlay in two places from the manufacturer.
The whole show is interesting, also part 1 about fixed CR knives, but for your question this video from the 7th minute should be interesting.
Awesome vid. So, who else had to take out their CR and examine it, play with,& clean it while watching?
I've wanted to own a Chris Reeve's knife since I was 15, my uncle was a collector and I was always into knives. Now at 30 I have finally made it happen.