I am not totally sure but I believe this an example of the se passive. Basically, hace means he/she/it makes. However, se is used before so that the expression could refer to any of those three. All the reader knows is that some agent "made something" in this case.
A brief explanation of spanish passive voice:
true passive: In english, passive voice is when we say a sentence like "the car is sold". Who sold the car? I have no idea, but someone did and now it is sold. The true passive is basically the exact translation of this: el coche es vendido.
se passive: Se passive has the exact same meaning as the true passive, it's just a different structure. In the se passive the formation is as follows: se + verb conjugated in he/she/it or them/you-all form. Example: se venden. This literally translates to "they sell themselves". There might be some context in which this makes sense, but if this is referring to an inanimate object(s) as in "se venden oro" then it would make no sense for the object(s) to sell itself. However, because we just said that the gold sold itself, the gold must be sold, which leads us to translate the phrase "se venden oro" to "the gold is sold".
Analysis of se hace: "hace" all alone would mean he/she makes, or it makes. Because of the context of the exercise, we'll assume the "it makes" case. When we put se before hace, we now translate to "it makes itself" which is synonymous to "it is made" as per the se passive explanation above.
If you are still having trouble understanding spanish passive voice, here is a nice article explaining it all pretty well: http://spanish.about.com/cs/verbs/a/passive_se.htm
We use 'se' when a subject is not identified. It is also what makes a sentence passive. So 'se' is translated as 'it'. Answers accepted are 'how to do it' or 'how it is done'. Hacer is conjugated to third person singular to match to the use of 'se' as it. I am writing this out for my own benefit and I'm sure if anything I said is wrong someone will point that out which I do appreciate.
in a way, at least in english, those are both saying the same thing in slightly different ways. I've noticed that in some instances spanish has a way of generalizing english phrases, and other times english generalizes spanish phrases. By generalizing, I mean a single phrase stands for several different meanings in the other language and therefore requires context.
The issue here is, where is "it" in the sentence. If you translate the sentence literally you get "I cannot say how it does itself." You can even say "I cannot say how it makes itself." Since we don`t say "it does/makes itself" in English "se hace" becomes "it is done". Hope that helps.
The use of "se" in this context makes it passive voice - I cannot tell you how it is done ("it" is being done/acted upon by an agent that is not stated in the sentence. "it" is not actively doing anything, it is having something done to it)
So say "....how HE does it" you would say: "No puedo decir cómo él lo hace" or, if context allows you to omit the "él" - "No puedo decir cómo lo hace"