This is a much simpler question to answer. Yeast is deactivated by 'killing' it with heat, which is done after it has been allowed to grow. This 'dead' yeast - I'm sure that'll have some omnivores screaming, "hypocrite" at the vegetarian and vegan community (for anyone who feels the urge to say it, yeast is a type of fungus) - is then ground into powder, which resembles cornmeal, or crumbled into flakes, which look a bit like fish food.
That all seems simple enough, so you may be wondering if it's possible to make nutritional yeast at home. While it is, theoretically, possible, the species of yeast used for making nutritional yeast may be harder to get hold of than traditional bread or brewer's yeasts.
Nutritional yeast is usually made from Saccharomyces cerevisiae, and could take up to a week to 'culture'. It's also worth bearing in mind that many branded nutritional yeast products come fortified with vitamin B12, which should make them the best choice if you're purchasing nutritional yeast for its many health benefits.