This article describes one of the ways they are producing these little creatures:
Teacup Puppies– All the rage Bailing out Benji
I'm sure they must have other methods. We see so many here on YT that fall for the line that this is a "tea cup" only to find they end up with a 9 to 15 lb dog. I'm sure these breeders think that putting two small dogs together will naturally produce even tinier puppies, which is very untrue.
I have read many sad stories of people who were tricked into thinking they were getting a tiny dog and were disappointed. I also see the numbers of discarded poorly bred supposed "tea cups" going into the shelters daily. It is to a large extent the fault of dishonest breeders but I also blame the media that promotes these dogs as well as the people who think having a tiny dog will be a fun and fashionable adventure.