A tooled lip is made by forming existing glass into the shape of the lip. By contrast, an applied lip, as the name suggests, begins by adding a band of glass to the neck of the bottle and then running a lip forming tool over that glass.
The result is that with a tooled lip, the bottom edge of the lip is precisely formed as if the lip were part of the mold. With an applied lip, there is typically (but not always) some bits of glass at the bottom edge and/or unevenness. Frequently, but not always, one can see some evidence ( a crevice or space) which suggests that the lip is a separate bit of glass.
Hope this is helpful.
