Custom arduino board
I have a page about a breadboard Arduino which is basically an Atmega328P processor (same as in the Uno, inter alia) on a breadboard.





Also a wire-wrapped Arduino.





You can go pretty minimalistic with a ATtiny85 mounted on a button battery like this:






  Is it possible to shrink the arduino(make a custom arduino), and all of its shields on to one board?


Ah there you might be asking a bit much. There are hundreds, if not thousands, of shields people have designed for it. Certainly you can make up your own board to meet a specific purpose.