I believe he is talking about a spacer he made that resembles a top hat. And blueing the spindle is a machinist die used for marking on steel, very similar to magic marker only liquid. He used the die on the spindle, then slide the hub on so he could mark where the bearings and nut would be. Then he threaded the spindle up to the mark.
My disk brake kit from Master Power Brakes, uses a Ford inner bearing and Chevy outer bearing with a top hat looking adapter/spacer that slipped on the spindle. The seal and inner bearing rides on this adapter while the outer Chevy bearing fits just a normal bearing would. The top hat spacer positioned the hub forward enough that the stock threads and lock nut worked as intended. A adapter/spacer is required due to the spindle diameter, bearing race diameter, and availability of bearings with in those measurements. Even though mine uses Ford and Chevy bearings, they both are common sizes and can be bought at any parts store, same for the seal. With out this interchange, special parts would be needed and the cost would rise dramatically and you would be limited to where you get replacement parts.
Joe