How do I drill holes for "cam nuts"?
A frequently used bit is a Forstner style bit, which drills (nearly) flat bottomed holes.  .  

For the smaller sizes (&lt; 1/2 inch, &lt;13mm) , a brad point bit is also usable and also (nearly) flat bottomed.  

Because these bits are minimally guided by a central drill point, use in a drill press is recommended (to prevent sideways drift).  Careful use freehand can also work.  Go slowly at the start, until the full circumference is inscribed, then higher pressure can be used.