Diatomaceous earth is a naturally occurring substance. In nature it can be found as large chunks of rock-like material.
These chunks of rocks are brought back from the deposit where they are ground up in to various granulations. This is due to the fact that different granulations are effective for different purposes. For more information on the variety of granulations and their purposes please see: Diatomaceous Earth Particle Size: Choosing the Right Granulation
After the rock is ground up it is washed and dried at specific temperatures in order to prevent it from becoming calcined.
Finally, the food grade diatomaceous earth is packaged for distribution by automated machinery.