Back in the days of the classic Masis and SanRenshos, everything got cut out. People didn't think about aero issues too much, and they even did this kind of stuff on road bikes. The Masi chainstays were sometimes cut out and inserts brazed into the cutouts which closed the openings and actually increased stiffness. I think that's what you're seeing in those speedbicycle images.
As for exposed bearings, it was common practice to take off the grease shields or dust caps on the pedals, hubs, bottom bracket, etc., and lubricate them with machine oil. They sure spun like crazy. You still actually get a fair amount of dust and grit from riding on a track, but the practice was to squirt oil into the bearings each time you raced -- both to freshen the oil and to wash out crap. I saw a beautiful Nagasawa not long ago that had this done to the whole Nuovo Record Pista gruppo -- today this practice pretty much reduces the value of the group to zero, but you saw a lot of it thirty years ago.