Dark mark beat me to it, but those two cylindrical cutters are the ones to use. (a 2-pack at the BGS for $18)
Dremel just calls them "cutters" for carving and engraving. They are akin to a router/end mill type of bit perfect for what you want to do.
Also I use the real pointy one in the photo for countersinking screw holes. Especially if the timber is already finished (or in pickguard material). The bit is really sharp so I don't even use the dremel, I just twist it between my thumb and forefinger. Occasionally I use in my old school "egg beater" hand drill.