Philipp Lenssen reports on how Google actually scans in books for the Google Book Search service. Yes, it seems like Google does it all by hand! Take a look at page three of The Trial and Death of Socrates. Now that is funny.
Postscript: Gary Price reminds me of his post on Learn About Open Content Alliance Book Scanning at the University of Toronto, with a link to Internet Archive's Book Scanning Robot. So that is how it works.