Slave cloning is performed by shutting down mysqld on a standby slave and copying its raw data files. There's no dump involved. This is widely regarded to be the fastest possible way to clone a slave in MySQL.

This is explained in the deeper doc files -- didn't want to bog down the top-level README with implementation details.

Meanwhile, data exporting (for shard splits or table defragmentation) is done on a standby slave with replication stopped.