This factory starts by making the insulated wire used to connect the lights by coating bare copper wire. Note the manual quality inspection starting at 6:34 with repair of any failed lights.
When Fourmilab introduced LED fairy lights in 2004, the manufacturing process was substantially less automated.
I am invariably impressed when I see the diversity of manufacturing equipment which reliably turns out a multitude of finished parts and/or products. The engineering of the many steps - some quite precise and complex - involved is stunning. I wonder if there is a a book telling this story.
Musk often comments that manufacturing rockets is much more difficult than engineering them.