The chocolate-making method that grinds cacao and sugar into a smooth paste is called refining.
During chocolate manufacture, cocoa mass, sugar, and often milk powder are passed through refining rollers. The rollers reduce solid particles to a very fine size, creating the smooth texture associated with eating chocolate. Particle size is important because particles that are too large can make chocolate feel gritty on the tongue.
Refining is distinct from conching. Conching is a later mixing and aeration process that develops flavor, reduces some volatile acidity, and improves texture. Roasting comes earlier, helping create the characteristic aromas of processed cacao. Winnowing is earlier still: it separates cocoa nibs from the bean shells after cracking.
Manufacturers may use several refining stages, depending on the recipe and equipment. Modern chocolate production also relies on tempering after refining and conching, because controlled cooling gives cocoa butter a stable crystal structure, glossy appearance, and clean snap.