On the whole cottage industry issue. This is kind of in my wheelhouse so to speak and if you will forive me, I'll plunge into a little segue:
This term is often misunderstood. It derives from the high medieval period, originally. During this period in Central Europe and Italy there were hundreds of very independent towns with significant autonomy from feudal control - ranging from complete independence as a "city state", to nearly full independence as a "Free City". These were basically most of the Continental European towns with household names today - Florence, Milan, Bologna, Sienna, Venice, Ragusa (today Dubrovnik) ... Barcelona, Valencia... Strasbourg, Augsburg, Frankfurt am Main, Cologne, Nuremberg... Berne, Zurich, Lucerne... Hamburg, Bremen, Stockholm, Visby... Lübeck, Danzig (today Gdansk), Krakow, Prague, Vienna, Buda (and Pest)... Ghent, Bruges, Ypres, Amsterdam, Rotterdam, Groningen. And dozens of others.
The little complex of buildings you see on the lower right in this 15th Century painting of Nuremberg is the Stromer paper mill, the first paper mill built north of the alps. It was placed outside of the city walls because it generated bad smells (like all paper mills) so they thought it was bad for the health of the citizenry. Nuremberg was a "Free Imperial City" at this time.
These places are where the Renaissance first started and spread, and the first proto-industrial revolution came along with that, starting in the late 13th C and peaking in the early 16th. They were very small communities by the standards of even the Victorian era - the largest had maybe 100,000 people, down to about 5-10,000 for the smaller ones. But they were all thriving centers in which new technology and industrialization first took off.
Originally industry was powered mainly by new improved types of water wheels, (windmills came into increasing prominence a bit later in some areas). Some of the key components of the Merlin engine and all internal combustion engines turned simple wheels into complex machines that drove industry. The cam shaft and cam slider for example, allowed the round and round motion of a water wheel (or windmill) to turn into the back and forth or up and down motion of a giant saw, a bellows, a giant trip hammer, a fulling mill, and so on. The toys of Archemedes and Heron of Alexandria were scaled up industrial machines.
This is a waterwheel powered blast furnace. Sawmills and bloomery forges like this were still being made well into the 19th century and even into the 20th in many places.
Most of these towns were originally organized around trade and a textile industry. Later this expanded into metals, mining and ore processing, shipbuilding, victuals like salted fish and beer, and a ost of other more specialized crafts. And mechanization meant rapid growth. One 13th Century 'overshot' water wheel could grind as much grain as 50 slaves had during the Roman Empire. In Rome those people might just go on the dole or be sent to a salt mine or something, in the medieval towns this meant basically 49 or 48 people are freed up and brewers and bakers guilds were established almost overnight. Once the sawmill was up and running, you immediately had a carpenters and joiners industry, and probably a shipyard. Catalan forge and Barcelona Hammer led to blacksmiths guilds which quickly split into various specialties - armorers, cutlers / swordsmiths, gunfounders, latteners, lock-smiths, bell founders, clockmakers and so on. One goldsmith got creative and made a new metal compound which he made into little individualized letters, combined these with an oil press and his name was Johannes Gutenberg.
All this meant an increased demand for raw materials and - (here's where 'cottage industry' comes into play) the towns had a very small work force - with increasing regional and even international markets. Some were trading all the way to China. So they organized the peasants in the hinterland around the town first for basic things like producing charcoal, bringing in lumber, growing grain and so on. But by the later 14th Century many towns were organizing the precursor stages of their major industries to be done in the hinterland. The most well know example of this, which was still being done in the 19th and 20th Centuries in some places, was carding and spinning and early stage textile processing, done in cottages of rural peasants.
This is Albrecht Dürer's 1494 watercolor of a wire pulling mill set up outside of his home town of Nuremberg. This is a 'cottage industry' facility.
But they quickly went beyond that and towns with military control over their hinterland started setting up little water mills all over the place for things like fulling cloth, processing dye, grinding grain, sawing logs into boards, smelting iron, forging steel, and processing metal. For example, they made nails and bolts and reinforcing brackets and so on. Sword blanks. This 15th Century Albrecht Dürer painting depicts a 'wire-pulling mill' - this is where metal is heated up in a forge, hot ingots are placed into a water wheel powered machine which extrudes wire through a draw plate. Goods like wire were moved at low expense back to the town mainly via rivers and canals. This is why so many medieval towns like Amsterdam, Venice, Bruges, Strasbourg etc. have all these internal canals linking them to the river (most older European towns are on rivers)
Many of the centers of metal production in particular during the medieval and Early Modern period were also (I think not entirely by accident) also industrial production centers during WW2. For example Augsburg, a textile and metal manufacturing center since the 14th Century, where they made a lot of the Bf 109s, and today I think BMWs. The name 'Messerschmitt' literally means 'cutler' or 'blade smith', and his family was from Frankfurt am Main which was another metalworking center. The Germans had shifted into modern industrialized production methods already in the 19th Century but still had 'cottage industries' with a lot of work done by subcontractors in small workshops, (many of which still trained workers according to some version of the old guild apprenticeship system). Same for places like Switzerland, Sweden, and Czechia. So I suspect when the Germans had to disperse some of their industries into smaller workshops so as to make them less vulnerable to bombing, these places and these old systems helped them do it.
IIRC in the 19th and 20th century in the US this 'cottage industry' thing was still done at least in the textile industry and probably many others even if more in the sense of contractors and subcontractors, which is what it already essentially meant even in say, 1400.
Of course, when it comes to something revolutionary like a Spitfire in the years leading up to WW2, the early versions are often 'bespoke'. They are almost like finely made flying sculptures. Gradually these are transitioned into something that can be made in a highly efficient manner on an assembly line, but that takes a while to work out.