Dunkin Donuts sells "munchkins", which are "donut holes". Are the munchkins really made out of the cut-out holes of donuts, or are they produced entirely independently?

why is there the assumption that a hole is cut out of a doughnut in the first place. Most if not all commercially made doughnuts are extruded so there is no cut-out doughnut hole in the first place. In a business with tight margins doughnut holes can be the difference between high profits or loss.

http://home.howstuffworks.com/krispy-kreme.htm

It's like the 'holes' from the Polo mints that they used to sell. A marketing gimmick. Ring doughnuts are extruded in commercial manufacture, and may be hand rolled in small scale production. The mixture is extruded with a ready made hole in a sort of pipe shape and sliced. Here's a machine that does the lot including fry them: