Years ago, when lump was nigh impossible to find, I investigated making my own. A video I found on YouTube showed it being made by filling a drum with wood. This drum only had small holes to allow moisture and VOC's out, but not enough oxygen in to start a flame. Then that was put in a larger drum with a large fire and allowed to burn for a long time. This process left behind the carbonized wood, or lump, in the inner drum.
I decided to order wicked good on line.
I am sure there is a more precise explanation to be had, but that just seemed like a lot of work for a little result.