Taken from Rivendell site
1. What is a lug?
A sleeve of metal that surrounds the frame tube at the joint, strengthening the joint. Most modern frames don't have them.
2. How come?
They're more expensive to build with; and from a strictly practical point of view, they're unnecessary.
3. What does a lug do?
It strengthens the joint by adding material to the stressed areas, and distributes the stresses over a large area. And it adds an artistic element to the frame joint. And it allows tubes to be joined by brazing, rather than welding.
4. Why brazing rather than welding?
Less heat, mainly, and one of the benefits is that the tubes themselves are not melted. So, if you crash and bend a top tube, for instance, it can be replaced and the frame made good as new.
5. Are all lugs alike?
No. Some are well-designed to eliminate stresses. Others cause stresses. Some are thick, some are thin. Some fit the tubes well, others don't. Some are rather plain, some are rather ostentatious. Some are generic and available for purchase by anybody, others are proprietary and unique to one brand of bike. Some are hand-cut and one-of-a-kind. In addition, lugs can be made by any of several methods, including but not limited to investment casting, stamping and welding, die casting, and machining.
6. Is there any reason to get a lugged frame over a glued or tig-welded frame?
Well, it depends. From strictly a functional perspective, in the short-term life of a bicycle, it makes no difference whether the frame is lugged or not. And, if you plan to get a new frame every couple of years, then the long-term benefits of a lugged frame (durability and the ability to replace bent/crashed tubes) don't work for you. Likewise, if you prefer the appearance of tig-welds, then you won't be talked into lugs, no matter what.
We love lugs. We don't build frames without them. We like the look, the art, the way they're made, and we like designing smart, beautiful, and unique ones. We also like knowing that a the frames we make will be identifiable even in 300 years, because of the lugs beneath the paint.