Almost there Clive, piston seals are generally of a square cross section, and it's the base of the seating groove in the caliper that's angled, this angle tilts the seal in the groove so that the inner edge (facing the inside of the caliper and bearing on the piston) is of a slightly smaller diameter!
It's the tilt on the seal that creates both the seal and 'grip' on the piston and also helps 'return' the piston when the brakes are released so that the pads don't bind, yet keeping the piston in close contact to the pad and preventing it from being sucked back into the caliper by the hydraulic action of the master cylinder piston returning!
Such a miniscule difference in piston size in my view ain't going to cause any grief as long as there's no excessive wear in the caliper bore where it operates, the piston doesn't seal the bore, the seal does, but the clearance shouldn't be enough to cause the seal to be deformed by a sloppy piston fit and leak!
In all my years as a motor engineer, I've never seen any caliper wear to such a degree, but corrosion on cast iron or alloy calipers and pistons are generally their downfall not wear!
As for 'home made', why not? as long as it's well machined and polished and of decent material who is to say it's not an aftermarket product, there are loads of companies making these products as conversions for the classic car market!
John