On the upside, a CNC, or computer numerical control machine such as a wood router is being controlled, guided or positioned by numeric output from a computer.  CNC routers can be very fast, moving at speeds in excess of 600 inches per minute, cutting 3/4" plywood shapes in one pass with accuracy rates of +-.002" . They are extremely versatile also in that they can cut virtually any design you can program at the keyboard and they can reproduce copies over and over. When cutting large straight objects they are amazingly efficient.

On the downside, a CNC machine cutting small intricate objects such as letters can be incredibly slow. The material to be cut must be held down to the table with double sticky tape and the router bits need to be very small, 1/8" - 3/16" and 1/4" are the standard bit sizes to get into all the small areas. These bits are expensive and break easily so the machine must be slowed down to speeds of just 25 or 30 inches per minute or less. Also, since the depth of cut should be no greater than the cutting bit diameter, it may take several passes to cut 1/2" or 3/4" material all the way through.

There is little or no economy of scale with producing letters in this fashion since it takes just as long to cut 1 item as it takes to cut one item x 100 times or more. For economy of scale you need something like a die press or a mold, where you make a die and set it up in your press then cut 30 or 40 whole alphabets in as many minutes. The initial cost is in the die, much like it is with a plastic mold, then its just a matter of how many you want. The more you order the lower the cost since one die can last for hundreds of thousands of impressions before it needs sharpening.

The benefits of CNC are that for small runs or even for 1 item and prototypes, the versatility of the CNC comes into its own.  Its cheap to make 1 or 10 or 100, but its no cheaper to make one thousand than it is to make the first 10. I hope this explains the processes and dynamics behind the scenes.