Why does cookie dough cut with a cookie cutter keep their shape when baked but not when it is cut by hand, such as with a knife?

Pastry Chef here! As I understand it, when you cut straight down, whether with a cookie cutter or a knife, you create a clean break in the dough and basically seal the fat (butter, which creates steam, which causes spread) in the shape you cut it. If you use a knife in a dragging motion, you’re creating a less defined barrier, and in many cases smearing the tiny layers of dough/butter/dough. The butter melts and the liquid fat seeps out into the surrounding dough, causing it to spread. Either way, if you cut the dough and then chill it completely before baking, you’ll have much better results!

Not all cookie doughs are the same! Each one typically has sugar, eggs, butter/fat, and flour. The amount of each can vary.

Sugar cookie or shortbread cookie dough often has more flour and less eggs, and these are easily shaped and retain their shape when baked. Gingerbread cookie dough is another example of a cookie dough designed to keep it’s shape.

Other cookie dough, like chocolate chip or oatmeal raisin, they’re not intended to be shaped and often contain less flour and more fat, making them spread and puff up.

So many things determine how a cookie behaves in the oven. Ratio of ingredients, temperature of dough when it goes in, how long ago it was mixed, how hard it was mixed, how thick the sheet of dough is.

Most of the cookie fails I’ve seen where the cookie spread out into a blob come from either too much fat or the wrong fat in the dough (like butter vs vegetable oil), room temperature dough going into the hot oven, rather than chilled or frozen first, or just being a recipe that was made to spread out into big, circular cookies (like chocolate chip cookie dough vs shortbread cookies.)