Understitching means to top stitch the Facing to the layers of seam allowance underneath it. In the olden days, when I learned to sew, this operation was called "stitch in a ditch".
You want to topstitch the Facing as close to the seam where the outside of the vest is sewn to it, making sure to catch all the seam allowances underneath. This operation keeps the facing flat inside the vest where it covers the seams allowance and stays. Along with any interfacing, it helps to support the armholes and neckline of the garment. In some places, this facing may be impossible to lay flat on the sewing bed-the area is too narrow or closed and you can't open it up enough. Usually this happens when you have a facing that combines the armhole and the neckline all in one, or you come to the closure where the buttons or zipper is. In those cases, you just understitch the Facing down as far as possible until you come to the point where it will no longer lay flat and go under the feed dog. HTH. PM me if you like.