When Lily's have finished flowering do you prune them to ground level ?

No. Cut the flower heads off so the goodness goes back into the bulb for next years growth. Then in the autumn when the whole plant dies back you can cut the plant down to ground level. When it starts to shoot again next spring you need to put some slug and snail protection down as they love the new growth.

Take of the dead flower heads (unless you want seedlings) and leave the stalk to die back like any other bulb because this helps the bulb increase in size and produce more flowers next year. If you cut down the foliage too early, the bulb does not get the chance to renew its energy. Cut them back down when the stalk is dried. You can divide them in the autumn after a few years if they begin to get too crowded.

In a word,no.Allow the blooms to die back,in all probabilty they'll set seed.Also,letting the foliage to wither in situ will feed the lily bulbs and produce bulbils.

These small bulbs can then be grown on and increase in number.

No. Deadhead(cut off the bloomed out flowers) but let the leaves die naturally. They are storing nutrients for next year's growth now.