How Do They Make Surface Mount Capacitors and Resistors?
There isn't a lot of written material on the net about discrete component manufacturing.  If a picture is worth a thousand words, is a video is worth even more?

Here is a very informative video about ceramic capacitor manufacturing.  It starts with a roll-to-roll process with ceramic-coated tape that is patterned, stacked, and laminated.  The layers are then mechanically diced into individual components.  A large part of the process occurs AFTER the near grain-of-salt sized components are separated, including putting on the contacts.

The video for resistor manufacturing is not as impressive, since it's just an animated representation, but it does show all of the steps.  The process begins with a ceramic substrate that is molded with a grid of grooves on one side so that it can eventually be snapped into individual components. There are  screen printing steps for the resistance layer, contacts, encapsulation, etc.  The process also includes laser trimming the resistance value and separating the parts, but I couldn't find any videos of these steps in an actual production line.

Given the precision and the number of steps required to create these tiny components, it's amazing that they cost so little.  I guess that's the magic of economies of scale.

(And don't forget that after the parts are made, you still have to put them onto tape so that they can be easily accessed by the pick and place machine.)