I turned a spalted oak bowl on my lathe. I put an engraving on the bottom. I placed the bowl on the spoilboard and slowly jogged to make sure the bowl would not hit the bottom of the Z. It just barely cleared. I did the engraving and put some sanding sealer on it and will paint it tomorrow.
Here is the engraving (advanced vcarve with #122 and 15 degree vee .1" deep. The bowl diameter on the bottom was 5". I love the ability to put text in a circle.
I used a #122 and that is relatively short. I used a 15 degree vee but that is normal. The Z (HDZ) retracts much higher than the bottom of the Z frame. So I did not have any problem with the bits and the bowl JUST fit below the bottom of the Z assembly.