You start with a network installation disk. And begin to choose things from the ground up. Choose what kind of kernel you want, click next. Choose what kind of file system you want to use and click next. Choose the sound system you want to use in your custom build(Alsa, PulseAudio(PA pisses me off), OSS, Jack, etc...) click next. Choose your desktop(Unity pisses me off), click next. Choose your security method(SELinux, AppArmor) click next. Choose a whole bunch of other thing, and when your done, it downloads all of the sources from the respositories, compiles everything from source, installs it on your system, reboot, and you have one helluva custom distro.

