There are special machines in garment production factories for making flat felled seams. You zip the fabric through and it's all done automatically. You can do a similar thing by hand...it takes longer but it turns out pretty nice and gives the inside of your garment a very classy, tailored look.
I've been working on men's dress shirts. I used flat felled seams on the armscyes after sewing the sleeves in flat.
First, attach the sleeve to the body of the garment. A 5/8" seam allowance actually works perfectly for this.
Next, trim the seam allowance of the body part of the garment, leaving the sleeve part of the seam allowance alone.
Now press the seam (a tailor's ham is really useful for this) towards the body of the shirt--the full 5/8" seam allowance will cover the trimmed one. This pressing sets the threads in the seam.
Now arrange the seam over the pressing ham so that it sticks up. It may seem odd to press the seam flat and then make it stick up again, but I find it makes the final pressing go more smoothly.
Now, fold the untrimmed seam allowance over the trimmed one so that the edge of the fabric lines up along the seamline and press.
Because you've already pressed the seam allowance toward the body of the garment, the folded seam allowance should lay down nicely for stitching. I like to press a second time just to be sure it's going to behave.
Lastly, from the right side, stitch the seam allowance to the body of the shirt. Here I'm using a 1/4" foot, but I tend to stitch at slightly less than the 1/4" mark because the bias curve of the armscye sometimes makes the folded and pressed seam allowance a little narrower than 1/4".
The result is a nice and classy looking seam.