Mostly, the designs are cut from foil or built up with very fine wire, but you can trim and shape the design with engraving after it is set as well. The technique is traditional in many countries, and the best overview of the process I was able to find on the web is from Japan:
http://www.kougei.or.jp/english/crafts/0813/f0813.html
(click on 'production' for the step by step process)
It is also described in "On Divers Arts" by Theophilus, a German monk c. 1120 AD, and in Untract's "Jewlery Concepts and Technology", the big reference tome of how-to for jewelry makers.