That's a different seal.
The seals inside are like a piston ring. They are actually rubber "O" rings.
They have a tremendous amount of pressure on them when the pedal is depressed. As in 400 lbs of pressure.

The front reservoir on the master has a piston ring as does the rear rez.
If either of those seals were to become damaged, that would allow DOT3 to slip past it.
In others, loss of pedal pressure.

When bench bleeding the master in a bench vise, there is nothing keeping your screwdriver from going beyond normal or reasonable piston travel.
When the master is installed on the firewall, the pedal travel is limited to the floorboard (carpet) so damage to the master can not occur.

You can imagine how many customers said: you sold me a bad master and wanted a new one or refund. In reality, it was the installer at fault, not the rebuilder / seller.
Hence the reason Void Warranty.

 

After I got my '82 this year, I thought the brakes just needed bleeding and boy was I wrong. I had to change all four calipers on my car. I decided to change the master cylinder as well to get a fresh start in case the MC had also pitted. I have a pressure bleeder that works good so I figured this would be straightforward. To be sure, I bench bled the master cylinder considerably and no air was showing. Then did the caliper bleeding in the order of the manual...and again....and again. Went through a lot of DOT3 and never had so much trouble bleeding brakes before. Still soft and low pedal.

So, what solved the problem for me was this post: Get the last bit of air out from the brake master cylinder. - CorvetteForum - Chevrolet Corvette Forum Discussion

The youtube videos linked in the post really helped as well. I really had to jack up the back of the car to do this, similar to pictures of other people trying it in the forum. To my surprise it worked.

 

What I do is pinch each rubber hose to each caliper to find which caliper(s) may cause the soft pedal. When all hoses are pinched off and you still have a soft pedal, then the problem is the master cylinder. Bench bleeding is a PITA and takes a lot of effort to get all the air out. Over stroking does cause problems. Cycle the strokes slowly to prevent the air bubbles from becoming smaller. When the air bubbles stop coming out of the bleed holes, stop the stroke and slowly return to the stop position. At times, if you slowly stroke the master cylinder in car (without the engine running and after the vacuum assist is depleted) you can get trapped air to bleed out. I still see people (including professional technicians) have a buddy pump the brake pedal to bleed brakes at calipers. To keep big bubbles from becoming microscopic bubbles, have the buddy slowly push the brake pedal once to the floor and hold while you open the bake caliper bleeder. Gravity bleeding in sequence is a very good procedure, but will not completely remove trapped air in the master cylinder. Sometimes, you can loosen the brake lines on the master cylinder in car, one at a time, starting with the front line, and have a buddy stroke the brake pedal once and hold, while you tighten the line, then have your buddy slowly release the pedal. It is really important to bench bleed your master cylinder completely before installing on your vehicle.

 

A little more detailed description of when / where you feel the softness may help us / you to diagnose:

• Soft at idle - engine on - pedal reaches floor - booster issues
• Soft or hard engine off - how many strokes - booster issues
• Soft only when driven - booster issues
• Soft all the time - likely air or hoses
• Soft only on first brake application when driven - excessive pedal travel 1st time - rotor runout
• Soft on every push when driven - rubber lines or air
• Test with wheels off the ground do fronts grab and not rears? or reverse? - proportioning / safety valve tripped, swollen shut flex lines
• Soft only when brakes are used strongly - pad compound selection or pad burnishing issues
• Which pads? some feel more solid than others

The currently available rubber compounds in the flexible brake lines balloon / swell much more than the old no longer available GM lines of the past - if you really want a solid pedal under strong use consider the stainless flex lines for a big improvement