Aparently, it's made from green tea which has been moulded with Aspergillus niger, which is a common mold, for about 3 months or so, then the leaves are dried and aged for 2 years. It produces the dark mold you find on foods like bread or fruit, and also is commonly found in peat. It is related to Aspergillus oryzae, which is the mold used to produce Asian fermented foods such as miso, amazake, soy sauces, and rice wine (aspergillus oryzae, I believe, is usually lighter colored).
Food consumption of Aspergillus niger is considered safe by the World Health Organization in small amounts, however... horticultural workers who work with peat, peat moss, etc., may be susceptable to aspergillosis, a very serious lung infection, particularly in people with compromised immune systems. Aspergillus spores can also cause allergic reactions in some individuals. Aspergillus niger doesn't produce carcinogenic mycotoxins, however, although some other Aspergillus genus members do. Pu-erh's health effects have been less studied than green tea, but it does appear to share with other teas, a degree of protection of DNA and cholesterol lowering properties (indeed, in one study the ability to neutralize nitric oxide DNA damage was slightly greater than black tea, from what I remember), despite the fact the tea is truely fermented (unlike black tea), leading one to ask wheather Aspergillus niger might have some possible contribution.
I'm not expert in mycology or medicine, of course. It's interesting that most of us throw out moldly bread, yet there's tea costing alot of money that is covered in the stuff. To each his own, I guess.