I work in a variety of LORT houses, and each of them handles the Understudy issue differently.
My most recent show had non-AEA/intern understudies, who also had smaller roles in the show. Only one of them ever had a costume fitting, and that was by my insistence. (I honestly don't believe we as SMs should have to rehearse Understudies if there is no plan to costume them, beyond "If one has to go on, we will work our magic..." After all, if you find out your Understudy is going on, where do you need them, in a fitting or in a rehearsal?) The trap of the above system, without Swings, is that if the Understudy goes on, there is a domino effect through the entire show structure, and although the Understudy is rehearsed, the rest of the the cast isn't practiced in how to do the show without that particular track. So...then you are in the position of rehearsing everything EXCEPT the Understudy, lol. I was able to do three Understudy rehearsals in this particular situation, Act I, Act II, and a full Tech, run of the entire show, which was actually a lot of fun!
I've worked in LORT with no Understudies, where the Producer went on with book in an emergency, or where roles were combined and staging changed at the last moment to cover for the lack of a actor (injury during Act I to an actor with a big sword fight in Act II...)
In LORT, doing a show with no Understudies, I guess what we do is hope and pray that no one gets sick, injured, or has a family emergency, huh? Look, the Producers say, at the Negotiating Table, that they will cancel if they are in a situation where they have an outage and no Understudy, but no Producer wants to cancel a show. They will go to any lengths to keep that from happening, including going on themselves, as above.
I am happy to rehearse and put on Understudies. But I believe the Artistic Staff of the show need to come up with the solutions for outages, that I am to rehearse. Although I'm great at these types of in/out puzzles, I've always felt the SMs job was to rehearse them, not
create them. And yes, after a few weeks of the run, we do know the show better than anyone (except the cast, actually, they know it best.) But still, isn't the Understudy
planning someone else's pay grade?
The LORT house I work at most frequently stopped hiring understudies a few seasons ago unless they were doing a show with planned outs. For years they had been hiring folks, frequently non-AEA, but if push came to shove they would almost never put them onstage. You created an uproar if you tried to schedule a costume fitting for understudies. They weighed the odds and decided they'd rather risk canceling a single show a season due to lacking a performer.