I found this tutorial maybe a year ago. Basically, it's papier mache beads. You take some newspaper, rip it into tiny pieces, then you pour boiling water over them to break it down. Drain the water from the paper. Use a clear drying glue (like Elmer's, they suggest) to form small balls. Roll into balls, squeeze out excess moisture. Let them dry.
Sand em, Drill em. And then, my favorite part, paint em. I like how she used multiple colors. I think it gives it a nice look. Then varnish, let dry, and you're ready to create. You should check out the tutorial.