This is showing a simple contrasting binding that is sewn with right side of bias cut binding to wrong side of sleeve (after underam seam sewn) then turnd to the outside and hand stitched with invisible slip stitches. or machine stitched close to the edge of binding.
This gives a pleasing and neat contrasted edge.
Please not the diagram is showing the open ends of the seam as instruction only so you can see how the hem is folded.
Underarm seam is sewn before hemming!