Drilling holes in wood is a fact of woodworking. Be it for fasteners, dowels, or a hole to tie through; eventually, you will need to put a hole in your project and you want to make it look perfect.
A common problem with drilling wood is grain tear out. This occurs when the drill bit first makes contact with the wood and starts to cut into the wood itself to make the hole. As it cuts in, the wood will begin to split along its grain like if it were being planed against the grain! This is easy to avoid with a wood plane since you can choose the direction to plane the wood in, but a drill bit will cut the wood in opposite directions. Rotary tools will have one side cutting with the grain and the other side cutting in the opposite direction, leading to this dreadful problem!
There are a few tricks to avoid this issue: drill through other wood first, and spin the drill in reverse first.
Drilling through other wood first is ideal. You will want to clamp a sacrificial piece of wood on the front and the back of the object you are drilling. These two pieces will suffer the grain tear out while your piece of wood will be protected. As you start your hole, the first piece will have its grain tear out. The drill will work its way deeper into the wood where the other fibers around will prevent any tearing, as the drill simply bores its way through. When you get to the piece of wood you are trying to drill though, the surface will be protected and covered, keeping it all safe from tearing. It is impossible for the grain to lift up because the top block is pressing down on it!
As the drill exists the back, the same issue can occur as the wood gets rather thin and the force of you pushing can cause a massive explosion of an exit wound in the wood. A second sacrificial block will ensure that this wound occurs on a scrap piece and not your project.
If you can not place a second piece on the back of the hole, simply drilling with very light pressure will avoid the exit hole injury. If you let the drill cut and pull your way through the wood instead of pushing with all your might into the wood, it will hopefully exit in a very easy and carefree manner, creating a nice and even looking hole without damage to the surrounding grain.
But say it is not possible nor practical to clamp sacrificial boards on every hole you need to make, what then?
This is a rather simple one, run the drill in reverse under lots of pressure. This obviously works better on softer woods, but softer woods are the ones that suffer more from this phenomenon. As you spin the drill in reverse, it will very slowly cut its way into the wood, creating a hole. Since there is no cutting blade digging in, it will not tear up the wood as it goes. The reason you need high speed and pressure is friction is going to be doing most of the work.
It is not uncommon to see a bit of steam rise from your hole as you scorch your way through the surface. The wood will abrade and burn away as you begin your hole, at least an 1/8 of an inch, if not all the way down to a 1/4 of an inch. Once you have reached this depth, it will be safe again to spin the drill forward and bore your way to freedom on the other side. The slight hole you made at the beginning will get you past the risky area where tear out occurs. This will let you quickly and easily start your hole and then drill away without much risk to the surface of the wood.