What is CD Replication and how is a replicated disc made ?
CD and DVD Replication is a process by which your data is,

1) First used to make a stamper

A  stamper, which is a shiny metal plate that has all your data etched into the surface.  The etching on the stamper is done by a machine that takes your data and puts it onto a shiny nickel plate. The stamper also contains data elements are actually called pits and lands,(raised and low) and represent the digital 0’s and 1’s that are used to represent data, pictures, movies and any kind of information or content that you need to carry around on a disc. It is similar in function to a negative in a photograph.

2) Then a clear moulded transparent CD is created.
Using special optical grade polycarbonate granules (made by Mitsubishi,Bayer,G.E) a CD is moulded, the stamper is placed inside the mould and thus the clear disc that emerges contains the data of the stamper embedded on the disc using the stamper which contains the data you need recorded.

3) This moulded disc is then coated with a reflective silvery surface.

The transparent disc, that is thus obtained when the powder is heated and moulded has invisible (pits&lands) on the surface of one side of the disc.
This data side of the disc is then coated with a very thin shiny layer of silver or aluminium called metalizing, so that when the disc is put into a player it reflects the laser beam that reads the digital data (pits and lands) when the disc starts spinning in your drive.
The last step in the CD replication process is to coat the metalized disc with a protective layer(lacquer), after which it can be printed with your creative design using digital, silk screening or offset printing technology to help  identify the data side and the information side of the CD.
4) So to sum up CD replication, we need,

Optical grade polycarbonate,
An injection moulding machine.
A  stamper that contains your data,
A metalliser that coats a shiny layer on the data side of the disc.
An artwork you have to print on the disc.
There is a very high level of precision and dust control in the process.