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Anybody?
It is so that the waist can be cut super tight without worrying about cutting into the welt stitching which has been replaced by the pegs.
I remember reading about small wooden pegs that are used during the welting process of dress shoes. This I read in Laslo Vass' book. Frankly I'm still quite perplexed. Maybe the pegs you see on your shoes are overt signs of handcraftmanship?