Fullmetal Alchemist is an Anime that IS somewhat based on real alchemy, so you can ask this question by thinking about Real Alchemy in this very own world we live in.
In the past, many alchemists tried to create artificial life-forms called homunculus, which was used in this anime as a base for the homunculus in the anime.
The Dwarf in the Flask looks very similar to what alchemists at that time were trying to do, like trying to fertilize a chicken egg with their own semen and blood, seal it inside a flask and hope that a small human would be born from that interaction.
So, as he was made inside a flask, he probably was made in a similar manner, we just don't have the exact "recipe"
Here are some references and interesting facts:
By the way, I didn't know, but Paracelsus was credited for the first mention on Homunculus.
Paracelsus was the inspiration behind Hohenheim, which is where his name came from:
Philippus Aureolus Theophrastus Bombastus von Hohenheim