Piston notching is common when you mill your heads or install larger valves. The tops of most pistons have half-moon shaped grooves in them where the valve comes down. Piston notching simply makes this larger or deeper.

As for machine shop mods, I'm not quite sure what you mean. However, I'll take a shot at an answer. The most common modifications made to an engine block is to bore and stroke it. Boring is the process of making the diameter of the piston hole larger to fit a bigger piston. Stroking is when you modify or change the crankshaft to pull the piston down further, filling the piston sleeve with a greater volume of air. Boring and stroking are simply two methods to increase the amount of air an engine can take in. They are often done together. I hope this helps. Its hard to explain without showing you on an actual block.

You should be a bit more specific as Matt mentioned. They can do lots of things to squeeze HP from a motor, just depends on where you want to start. Best place is cylinder heads where most of the HP magic happens. Block prep is also essential for making power, the old term 'Blueprinting' comes to mind. Much is not secret stuff, but just making sure things are dimensioned correctly. Indexing the crankshaft, pistons at the correct deck height, etc, etc. Check out a couple of engine building books they will outline the basics. Another good book for interesting tricks is Smokey Yunik's 'Power Secrets' some stuff might be outdated, but still interesting. Most engine shops will tell you what they do to your motor as well. If they don't, skip them.