How do you keep the leather covering tight on a small bag lock?

On the shell fit, the honest answer is you do both. Cut the pattern a hair snug so the leather has to stretch slightly over the metal body, and use a thin smear of contact cement on the metal before you slide the shell on. Glue alone over a loose pattern will still let the shell rock when you twist, because it's only bonded where the leather touches flat surfaces and the corners stay hollow. Snug leather plus glue is what kills that shift. One trick that helped me a lot: case or lightly dampen the leather before you pull it on. It stretches easier over the tight spots and shrinks back as it dries, so it clamps itself down around the lock body. Then the back seam gap mostly disappears. Also make sure your stitch line at the seam is pulled while the leather is still damp, not after it's fully dry, or the thread tension loosens as everything settles. For the key covers, yeah, the lumpiness is almost always skiving, with a little bit of technique mixed in. You want the overlap thin enough that it tapers to almost nothing at the edge, not just thinned overall. Skive a long shallow feather rather than a short steep one, so the leather rolls under instead of stacking. Warming the piece as you fold helps too, either by working it over a bone folder edge a few extra passes or giving it a quick pass with your thumb while it's still damp. The damp fold is really the difference maker. Dry leather folds flat and leaves that stepped ridge at the edge, damp leather rolls around the key head like it wants to. And to be fair, it does get better with practice. My first set of key covers looked like they had pillows stuffed under the leather. By the third or fourth one the turns got clean just from learning how much material to take off and when to stop fussing with it while it dries.

Not sold on the dampening trick combined with glue, that's the part I'd push back on. Contact cement needs a dry surface to grab, and if you've got a damp shell sliding over a glued metal body you're bonding to water, not leather. I did this on a purse clasp a while back and the shell popped loose within a week. My fix was simpler: dry leather, snug pattern, glue, then let the whole thing sit under a couple of rubber bands overnight. Pressure while the glue cured did more than any wrestling did. Did your shift happen right away or after some use?

I'd add that it's worth making a throwaway shell out of scrap first. I did that on a clasp cover last year and caught that my seam allowance was eating up all my snugness. Wasted a bit of chrome tan figuring that out the hard way on the first one.

Also for the keys, I run the folded edge over a slicker a few times while it's still damp and it flattens that lumpy bit right out. And don't mess with it as it dries, that's where I always made things worse.

For the key covers, one thing that cleaned mine up was making a paper pattern off the actual key head instead of eyeballing the allowance. Tape a scrap of paper around the key, mark where the fold lands, then add your skived overlap to that. I've done maybe a dozen of these little covers now and the last four came out flat on the first try once I stopped guessing at the width.

Also, if the edges still fight you after skiving, a light pass of edge beveller on the overlap before you fold takes the sharp corner out of the equation. The leather turns around a soft edge way easier than a square cut.

Agree with the throwaway shell idea, that saved me too. I made a test cover out of some scrap veg tan and found out the hard way that my stitching holes were starting too close to the edge, so the thread was actually stealing the tension I needed to pull the seam tight. Moved the stitch line back a couple millimeters on the real one and the fit went from wobbly to solid. Cheap mistake to make on scrap instead of the good hide.