Athem. I may be the only person here who's actually had this done (albeit as an adult). Firstly, there are various forms, most of which are not irreversably damaging: that is, it is possible, through diligent and gradual loosening over some weeks, to get a natural foot back. Second, the tiny, tiny shoes you see in museums are actually toe caps -- the heel of the foot isn't covered, being tucked up into the folds of whatever you're wearing. This is how I learned to footbind.
OK. So what you do is to get some long pieces of cotton, say 8 inches wide by 10 feet long, some talcum and a safety pin or two (since you aren't sewing yourself in). Powder your foot well. Tuck the toes under, you'll be walking on 'em. Fold the cotton in half, roll the two ends and put the toes on the fold. The general idea is to pull the foot into a crescent shape by unrolling the cotton (like an elastic bandage) in a figure eight to lasso the ankle. Pin it up when you're done.
So how does it feel to walk this way? Not having toe caps, I've only walked a little indoors. It HURTS, but not excruciatingly -- truthfully, I've had worse high heels. It IS graceful -- the extra inch or so, plus the fact that you have to take tiny baby steps means that you sort of flutter, instead of walking. I could only go about ten feet in any given direction at a time, but I suppose if I were a Chinese sing-song girl, I wouldn't be walking much of anywhere, and as for a "lady", hum, well, you don't run marathons in a drawing room. I wouldn't want to walk too far outside even with shoes.
Apparently, it works best if you're a bit of a physical anomaly footwise, with VERY high arches, strong toes, and VERY well excercised legs. It was originally a dancer thing, not surprisingly, since it's somewhat like pointework. Unfortunately, some hookers got into the habit of keeping the wraps on...and well, anything misused is bound to be hurtful, so to speak. Most of the real horror stories were spread by Methodist ministers, who wanted to get money to convert the heathen Chinese, and whose wives may well have been dealing with corsets at the time.
Strange to say, I've wished I could lose weight so I could do it again....