Liquor is manufactured from corn, rye, and other grains - unlike wine, which is produced from grapes or other fruits. By definition, bourbon must be produced from a "mash" that was 51% corn.
Potatoes or other starch-rich foods can be fermented to produce alcohol. In jail, raisins and other foods are used to make "jailhouse hooch." Sugar can be added to provide more carbohydrates as food for the yeast, which convert the carbohydrates into alcohol and carbon dioxide. Carbon dioxide is boiled away as a waste product when making distilled liquor, but trapped to keep the fizz in beer, and sparking wine (champagne).
In 2012, The Virginia Department of Alcoholic Beverage Control had issued licenses for legal distilleries located in Albemarle County, Culpeper County, Fairfax County, Franklin County, James City County, Loudoun County, Norfolk, Richmond, Spottsylvania County, and Virginia Beach.1
The Bowman distillery in Spottsylvania County is the oldest legal distillery in Virginia. The original distillery was built on the family's Sunset Hills Farm in 1935, at the end of Prohibition. As Reston developed and land values increased, the Bowman family moved the distillery to Spottsylvania County in 1988. It now produces Virginia Gentleman bourbon as well as other liquor in a converted clothing factory (the old FMC Cellophane plant that once produced the inner linings for men's suits) located downstream of Fredericksburg.2
Illegal distilleries or "stills" are concentrated in the rural mountainous counties. For years, far more sugar was 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.3
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 or 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.
Franklin County in the Blue Ridge is traditionally considered the center of moonshining Virginia. 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. Race car drivers now circling around NASCAR tracks can trace the heritage of that sport to drivers carrying moonshine from mountain stills to market, using cars souped up to outrun government revenue agents.
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.
That pattern dates back to the 1700's, and whiskey taxes helped the first president of the United States define the power of the Federal government.
The farmers of Western Pennsylvania rebelled in 1794 against a Federal tax on whiskey, imposed by Congress at Alexander Hamilton's suggestion. The Federal government needed revenue to pay for the Revolutionary War debts absorbed by the Federal government from the states, in the compromise that had resulted in the capital being located on the Potomac River. Two Virginians were key in suppressing the Whiskey Rebellion. George Washington assembled an army of over 10,000 troops - the largest force of "revenuers" ever created- to suppress what was portrayed as an armed rebellion against the new Federal government. (The creation of the Confederacy in 1860-61 was just one of many sectional threats to disunite the union of the United States...)
The force Washington assembled was far more than necessary, but Washington, Adams, and Hamilton wanted to ensure that the supremacy of the Federal government was clearly recognized. Virginia Governor Henry "Light Horse Harry" Lee actually led the troops from Bedford, Pennsylvania into the western part of the state. At that point, the rebellion dissolved and pardons were quickly issued for most participants.4
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, a cheap fuel. One reason for "moonshining" at night, in moonlight, was to hide the smoke from the eyes of informers and tax agents - but today, propane tanks offer a smoke-free alternative.