Freshly-harvested rice is dried in its husk until there is no moisture. A wok half full of sand is heated until it's really hot. Then the rice grains are dropped in. The heat makes them pop out of their husk and puff up. Before they can burst they are scooped out with a perforated spoon which allows the sand and husk to slip through and neatly separates the puffed rice.
Puffed rice is made by a processing method called Extrusion. This uses high pressure and temperature in the form of steam to puff put the grain kernels. Many breakfast cereals and snacks like corn puffs are made using this method.