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Usually, they are very finely sliced and put into the soup.
Lemon grass is pretty tough and fibrous. I've seen larger chunks used in soup as well, but it's usually not eaten in that form. The most tender part for chopping and eating is at the center and low down on that stalk. You can peel back one or two layers to get to that part.
Can be used sliced or as a stalk. If using stalks, smash them with the flat side of broad knife. That helps release the fragrance. Not too edible as a stalk (very fibrous) unless blended together in a curry paste. Usually only the white parts are used but the leaves can also be cut, dried and used to brew a good lemongrass tea.
you can leave the about 1 inch chunks in the soup if you tell your guests not to eat it bc lemongrass is more like a layered stick. it doesnt get soft like veg's do. you can also very very thinly slice it after you peel off about 3 of the outer layers. go to a Thai restaurant and order Tom Yum Soup. I prefer asking for veg's and shrimp or tofu with mine.