As promised, here's my how-to on smooth felled gusset seams.

I hope the pictures are clear enough.  Here it is, my first tutorial.  Please, let me know if you like it?  Was it helpful, what could I do better next time?

This is what we are aiming for.  The finished gusset should lay perfectly flat, with no pulling or bunching around the intersection of the three seams.  There are two opposite corners of the gusset that have this type of three-seam intersections, the other two corners will finish in a straight line with the top edge of the sleeve (they are treated just like all your other seams).

You will find that the narrower you can make your seams, the smoother these three-way joins will lay.  Narrower seams will also chafe less and allow less shifting within themselves, so they stand up to frequent laundering.  They were also the order of the day in 18th C. sewing.  I aim for a finished seam width of 1/4."  I haven't attained the standard of 3/16" that was so common.

This is the point in the tutorial where I tell you my dad's 7-P rule for success in anything.  It goes as follows:  Proper Prior Preparation Prevents P*** Poor Performance (He was a Navy man, so you can fill in the ***, or not, as you choose.)  In this case, as with all hand-sewing, I find that if you pre-shrink, starch (as heavily as you stand to work with), and iron your fabric, you will find it much easier to line up your off-sets and keep them in position as you sew.  The starch also allows you to finger press as you go along and turn-under's will stay turned under with only finger pressing.  If you use pins (I don't usually, unless the fabric wants to slip or stretch a lot.), use the finest ones that will still stay in the fabric.  Make sure you are using the correct size of needle for your thread and fabric, too fine and it won't open the fabric weave enough for the thread to pass through without a lot of drag (which will fray your thread very fast, even with waxing), too coarse and it will leave large holes and pull the fabric out of shape (which will ruin your very narrow seams).  I find that pre-waxing a large number of threads and then ironing them inside of a fold of paper (removes excess wax and allows the wax to penetrate the thread) helps tremendously.  The waxed thread lengths don't tangle any where near as much as the un-waxed.  I keep them laid out at their full length inside a folded piece of paper, which also helps keep my sewing "helper," Gizzy from moving them on me.  Make sure you match your thread weight to the fabric you're working with.  I try to keep my sewing thread the same weight as the threads in the fabric.  Your felling stitches will blend in much more and therefore not be as exposed to wear as thread that is too heavy, or breakage and thread that is too light.

With all that out of the way, let's look at the most common method of working flat-felled seams in the 18th C.  I'm sorry that I can't be as certain of the methods for other periods, the 18th C. has been my main focus of historical sewing for the last thirty-five years.  Flat felling starts with the back-stitched seam, which is worked at twice the width of the finished seam.  Most commonly the underside layer is trimmed  or off-set to half the width of the finished seam.  I prefer to off-set as it saves me an extra step, and it also reminds me off which side of the seam gets the right side of the stitches and which gets the wrong (really thread/stem stitch) side.  You want your back-stitch side of the seam to fall toward the front of the garment, and the fell to fall toward the rear.  Your gusset seams will fall away from the gusset, this allows you turn under all the falls leaving no raw edges, while eliminating a lot of thickness that would otherwise chaff you to no end and cause a stress point that is prone to excess wear.  Less commonly, both layers were left even, but as this forms a thicker seam (more chafe, more wear) it is far less desirable.  I also have never been able to get that double layer to lay smoothly at the point.  When the back-stitching and trimming (if you didn't off-set) is done, you simply finger press the seam toward the rear, turning under the off-set and work a close overcast hem along each seam.  I highly recommend stitching your gusset into your sleeve first and then to body of the garment.  I leave the cuff of the sleeve unworked, until the sleeve is set in.  Having the cuff end open allows you more access to work the felling of both the sleeve seam and the gusset.  With all this said, let's begin.

Step 1 - off-set seam allowances by the width of the turn under allowance (with the front piece extending further than the back piece), then back-stitch  seam on seam allowance line.

pinning shown from the top-side                                                                                                                                                            

pinning shown from under-side, showing off-sets

Step 2 - Crease gusset diagonally (this is the line to follow for where your seam will lie when making your off-sets), pin gusset seams so that the seam toward the front of garment is pinned evenly off-set for its full length, and the seam toward the rear of garment is off-set on a slight slant from 0 off-set at point and full off-set at other end (this will be evened out before felling).  The felling will be away from the gusset, so the gusset is the top-side for your back-stitching.

gusset back-stitching finished,  shown from top-side of seam                                                                                                                                                                                 

gusset back-stitching finished, shown from under-side of

seam showing the slant of the off-set on forward seam

Step 3 - Back-stitch seam, pivoting at corner.                                                                                                                                      

Diagonal cut of seam allowance, off-set trimmed to an even
width, this view shows gusset seam to the right and the side

seam to the left.                                                                                                                                                                                      

 The pin is pointing to where the side seam and gusset seams

 meet at corner of gusset, in this view the side seam is on the

 right, the gusset is on the left and shows the diagonal cut.

Step 4 - On the under-side of rear seam of gusset, cut a diagonal line from outside edge of seam allowance to point where the three seams meet.  Cut only the one layer, this will pivot around the corner and be captured inside the fell.  Trim the 

slanted seam allowance to an even width.

Step 5 - Finger press seams (sleeves and side seams press toward the rear of garment, gusset seams press away from gusset) and turn under the upper layer along the off-set.  Make sure to pivot/swivel the diagonal extension around the corner of the gusset so that it will lay flat.  You can trim the point off the gusset (Don't trim too much or you won't be able to get enough turn under.) or leave it, the choice is yours.  I usually trim it to get the flattest fell that I can.

hemming fell down

side seam felled all the way to the tip of the extension

felling the gusset seams

Step 6 - Finely hem fell flat all the way to the tip of the extension.  Fell the gusset seams, working toward corner and turn-ing under the point so all seam edges are full enclosed (no raw edges).  You may need to jiggle things a little around at the point to get it all to lay smoothly, but the narrower your seams the less jiggling you'll need to do.   Now enjoy the finished gusset.

View of right side of the garment.

Another view of the right side of the garment.