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It's a translucent plastic with one smooth and one rough side in the beginning.
The size of the piece is like the size of average touch pad in a laptop.
They have many design on templates for you to choose from.
Then the plastic is laid on the template design and you use a black marker pen to trace the outline.
After that, use colour pencils to colour the different colour.
Once you are happy, you hand it over to one of the ladies running the stall there. She will put in into toaster oven and "bake" it which shrink it to a harder and smaller plastic of about 3 by 6 cm.

Ah! I've seen that on YouTube videos!!

I guess someone made a business out of that.

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