an image like that can be made a couple of ways and like lewis mentioned will utilize halftones. To get a print looking that smooth you will need to print multiple shades do get good transitions of the colors/shades and gradients.
Create the art in short
#1 hand draw, shading with pencil. Scan into photoshop and start smudging and blurring the pencil strokes.
#1 totally create in Photoshop coloring using the airbrush
you might also want to make sure you have a lighter image when you go to make a screen. You can get pretty heavy prints with halftoning, so you can compensate in the artwork up front.
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you might also want to make sure you have a lighter image when you go to make a screen. You can get pretty heavy prints with halftoning, so you can compensate in the artwork up front.
Correct.
The technical term would be Dot Gain. manually printing ususally see around 30-40% dot gain. You must compensate for this or the print will darken considerably.
Shading 
