We, at Kaleidscope Acres, do not dock our lambs tails, hair sheep not need this done, and we have never had problems with the wool sheep having natural tails either.
The reasons for tail docking are so the fleece can be cut easier, and will be cleaner, as well there is less of a risk of fly strike. Castrating sheep is done to make a ram into a wether, a sterile male sheep.
Tail docking, and castration, are often done to lambs, along with being vaccinated, around 3-5 days of age.
In both cases there are a range of tools that can be used, one of which is the Elastrator, shown below. The tool is opened to stretch out a small (special) rubber band. Either the tail, or scrotum and testicles, are pulled through the elastic and it is released, pinching off the blood supply to that part of the body - which will fall off in a week or two.
If asked about cruelty, I would have to say the proceedures are cruel, they may be necessary, but are still cruel. The lambs do feel pain, if even for a short time. Tail docking is not necessary in hair sheep, and even those which are hair sheep crosses, as the tails are often shorter than usual, and less wooly. I would say that there are other methods of tail docking, and I do feel the elastrator is the least cruel method.
Related Sheep Links
Tail Docking in Sheep
What is a Wether?
Advantages of Hair Sheep