What does 'Pituchei Chosam" mean?
Rashi (citing Targum Onkelos) and Targum Yonasan: It means that the letters were (not written, but) engraved
on the stones.
Sotah, 48b: They wrote on the stones with ink and held the Shamir worm
Like the letters on the seal of a signet-ring (Rashi).
See Torah Temimah note 4, who describes the Shamir.
What does the Torah mean when it writes "Musabos Mishb'tzos Zahav"?
Ramban: It means that the stones were surrounded by prongs.
Consequently the stone was covered on five sides by the golden setting, and it was only the surface of the stone that was visible.
Which allowed one to see the majority of the stone, as is customary with precious stones.