How is blood formed?

"All blood cells come from the same kind of stem cell, which has the potential to turn into any kind of blood cell. The body has a feedback system that tells it when to make new red blood cells. If bodily oxygen levels are low or if there are too few red blood cells circulating, the kidneys produce a hormone called erythropoietin, which stimulates the production of more red blood cells. But wher are the blood cells formed?"