There is uaually a soft rubber tape between the fender and the inner body panel or the fender is set in a bead of "bedding compound". I am not sure what determines which is used, but I have seen both. Maybe someone else could help. I will be putting fenders on my '66 in a few weeks.
65 Conv., 65 & 66 Coupes and the remains of
a 66' Coupe with 6 cyl. engine and V-8 3 spd.
Don't know if seam sealer is used or not, but here's a tip, make some washers out of old plastic milk jug or laundry bottle material. Install these with a few of the fender bolts for the line-up process. Remove the washers and reinstall the bolts when everthing is just so...you'll save scratching the finish with the external star washers.
'66 A-code Fastback (therapy)
'89 Town Car (SWMBO D'driver)
'87 Caprice (as req'd by Hagerty)