Erythropoiesis is the process where red blood cells develop from stem cells in the bone marrow. It proceeds through several stages, starting with stem cells that differentiate into progenitor cells and then normoblasts as the cells mature. Key changes occur like decreasing size, loss of nucleus and organelles, and increasing hemoglobin content. Erythropoietin is the main hormone that stimulates and regulates red blood cell production in response to hypoxia. Other factors like iron, vitamin B12, and folic acid are also necessary for erythropoiesis.