You've got a circuit that you've prototyped on a breadboard, built using perfboard, and now you want something a little more professional to sell/give away/use/whatever. Or maybe you don't. Either way - you might want to take the next step with a good circuit and etch your own circuit board. This makes construction easier, the circuit potentially more compact, and it looks a lot nicer to boot. There are a few different ways to go about making the board - the most common is to apply some sort of a mask to a copper-clad board and then soak the board in a solution that dissolves the non-masked copper. Laying out the mask can be done by hand with a resist-ink pen (RadioShack sells a decent kit for doing this), ironing on a printout from a laser printer, or by using a special photo-resist board.
Another method which is somewhat popular (but much more difficult) is to make (or buy) a computer numerically controlled (CNC) mill. This is basically a drill press that has some method of either moving in two dimensions or moving the board in two dimensions that is controlled by a computer. This allows the piece to move past the drill bit, which is controlled vertically by the computer. If the bit is just below the surface of the piece as it is moved, a line will be cut out of the copper cladding. If the piece stops and the drill bit goes down, a hole is drilled through the board where a component will go. This whole setup, while complicated, allows for nearly complete automation of the process and can produce very nice boards.