Legal liquor is manufactured from corn (bourbon by definition must be 51% corn), rye, and other grains. Vodka can be produced from potatoes or other starch-rich foods that can be fermented to produce alcohol - in jail, raisins and other foods are used to make "jailhouse hooch." When making beer, carbon dioxide is kept to provide the fizz, but the gas is boiled away when making distilled liquor.
Virginia's has legal distilleries located in Albemarle, Culpeper, James City, Loudoun, Richmond, Spottsylvania, and Virginia Beach. The Bowmans distillery, which claims to be the "oldest family-owned bourbon distillery in the United States" and produces Virginia Gentleman bourbon as well as other liquor, is located downstream of Fredericksburg now. It moved in 1988 from the family's Sunset Hills Farm in Reston and refurbished the old FMC Cellophane plant that once produced the inner linings for men's suits.
Illegal distilleries or "stills" are concentrated in the rural mountainous counties; far more sugar is sold in Franklin County than the local residents could ever eat. Whiskey manufactured under "moonshine" rather than by state permission is not taxed, and therefore is dramatically less expensive. Some moonshine might be shared with friends, families, and trusted customers near where it is manufactured. However, the customers are primarily "nip joints" (unlicensed bars) in urban areas such as Richmond, Baltimore and Philadelphia.
In my incomplete (but still satisfying...) experience, moonshine is sold in a Mason jar normally used for canning, sometimes with a peach on the bottom to give it a little bourbon-like color. Otherwise, "white lightning" is a clear fluid with an alcohol content comparable to grain alcohol, often above 100 proof. (200 proof is 100% alcohol.) Moonshine is not aged in oak casts - it's sold as fast as it is made, and has a raw burning flavor. The taste may be rough, but the "kick" should be quick. Good moonshine can "hold a bead" so a bubble at the surface stays intact, due to surface tension and indicating a high percentage of alcohol rather than watered-down product. It the bead bursts too quickly, don't expect to get your money back by calling the Better Business Bureau of the Virginia Department of Agriculture and Consumer Services....
Naturally the state and Federal governments try to stop illegal production of alcohol, in part to ensure that liquor is safe as well as taxed. Back in the days when car radiators were used to condense the vaporized alcohol into liquid phase, enough lead might end up in the moonshine to blind or kill the final consumer. The origins of NASCAR are linked with the development of skilled driving to elude revenue agents and transport the untaxed, illegal liquor from the mountains to the final market in coastal cities.
Moonshining is concentrated in the mountains for several reasons, but primarily because there's a centuries-old tradition of converting corn crops into whiskey to simplify transport for sale outside of the region. The roads in the Blue Ridge and the Appalachian Plateau have always been poor, due to the cost of construction. Farmers in the mountains might raise more than enough corn to feed families and livestock, but the cost of transporting the surplus to a market was too expensive. Once the bulky corn was concentrated into liquor, farmers could transport it and still make a profit - unless taxed too heavily.
Moonshining does occur in city basements as well as mountains hollows. However, there are more job opportunities in the cities, so there's less incentive for people in urban areas to tackle the hard work of making illegal whiskey there. Also, the distillation process requires substantial heat to boil the mash and separate the alcohol vapor from water vapor. Mountaineers could use wood, whereas city moonshiners have to pay for electricity or gas. (One reason for operating at night, in moonlight, is to hide the smoke from the eyes of informers and tax agents.)