How is a pearl formed?

From the text:

The gray oysters with ruffles like skirts on the shells, the barnacle-crusted oysters with little bits of weed clinging to the skirts and small crabs climbing over them. An accident could happen to these oysters, a grain of sand could lie in the folds of muscle and irritate the flesh until in self-protection the flesh coated the grain with a layer of smooth cement. But once started, the flesh continued to coat the foreign body until it fell free in some tidal flurry or until the oyster was destroyed.