Okay. Seat concentricity is a measure of runout. There is also vertical runout, which you can have even if the seat appears to be "round". 49 years ago, the vast majority of valve seat work was done with stones. It is easy to end up with all kinds of issues with stones. With that said, it is also possible to do a pretty good valvejob with stones, if you watch your step. Pilots, holders, and stone dressers all must be in very good shape to get there, as well as a proper method for holding and applying the seat grinder to the work. It is almost impossible to make a repeatable multi-angle valvejob with stones, although one can get close enough that you might not see a measureable difference on a flow bench.
My thought is that a person learning should be required to create a nice multi-angle valvejob with stones, regardless of the flow quality, just to understand the principals......much like learning to add and subtract before you get a calculator, or these days.....a compooter.
I have a plethora of stones, and a good working old Sioux seat grinder. I use it when I am exploring new ideas for valve angles and seat widths, as well as angles and widths of what I put above and below the sealing seat angle. I can create any width and angle I want, and then if I see something I like, it is at that point I have a cutter made like my creation. In my opinion, that is the best use of the stones in this day and time.
Back on the question of "runout". There is more than one way to get an acceptable result, but regardless of the machine, the pilots, holders, and cutters MUST BE in great shape. Sharp and no slack!! Some Newen machines have no pilot, but not many of those around. If your tooling has slack......the bigger the valve, the worse the turn quality gets.
At my shop, we finish cut the seats until there is zero runout in a .001 increment dial indicator. I would say we might have up to a half thou sometimes in reality, but you can't measure it. The "lap" does not lie! We lap everything that leaves here. If it doesn't lap, it doesn't leave!! If you get more than about .002 vertical runout, you will have trouble lapping it. The .0008 to .0018 stem clearance you should have, depending on application, can't absorb the runout when it gets much more than .001. Some coarse lapping compounds can also fool you and mark a seat when a light grit like a .600 will tell the tale. I would say the most common errors are sloppy or flexing pilots, and dull cutters. When a cutter gets dull, it will follow existing terrain rather than cutting a new, flat path.
I say you should have zero on your guage in order to end up +/- .0005, which is the method we use. It takes a while....shops that do $100 valve jobs will not take that time. If they do, the doors will close fairly quickly.
Two things that must be right for success are a top notch valvejob, and a top notch hone job. Lots of things matter in an engine. Some things will show themselves if wrong, like bearing clearance. Bad head work and honing is like hepititas for an engine. It will live with it......it just won't be healthy. Rant over......
About the runout guage.....it MUST be straight and tight in the guide to give good info. If it moves at all, you will see "runout". Just be sure you see what you think you see in that regard.
