Aparently, it's made from green tea which has been moulded with
Aspergillus niger, which is a common mold, for about 3 months or so, then
the leaves are dried and aged for 2 years. It produces the dark mold you
find on foods like bread or fruit, and also is commonly found in peat. It
is related to Aspergillus oryzae, which is the mold used to produce Asian
fermented foods such as miso, amazake, soy sauces, and rice wine
(aspergillus oryzae, I believe, is usually lighter colored).

Food consumption of Aspergillus niger is considered safe by the World
Health Organization in small amounts, however... horticultural workers who
work with peat, peat moss, etc., may be susceptable to aspergillosis, a very
serious lung infection, particularly in people with compromised immune
systems. Aspergillus spores can also cause allergic reactions in some
individuals. Aspergillus niger doesn't produce carcinogenic mycotoxins,
however, although some other Aspergillus genus members do. Pu-erh's health
effects have been less studied than green tea, but it does appear to share
with other teas, a degree of protection of DNA and cholesterol lowering
properties (indeed, in one study the ability to neutralize nitric oxide DNA
damage was slightly greater than black tea, from what I remember), despite
the fact the tea is truely fermented (unlike black tea), leading one to ask
wheather Aspergillus niger might have some possible contribution.

I'm not expert in mycology or medicine, of course. It's interesting that
most of us throw out moldly bread, yet there's tea costing alot of money
that is covered in the stuff. To each his own, I guess.