There are probably different ways to do it, just as there are different reasons for doing it. Breeders most likely cull to find the best fishes under a whole lot of fry, and to keep those a better chance and good water quality by eliminating the ones that are crooked, have not the traits the breeder is looking for and generally to keep the water quality and gl/fish under control....
The way I did it when I had fry from an oranda and a lionhead (dont ask

), I waited until the fry was big enough to even see their backs and fins. I had them in a 160 gl tub outside, so it was kind of hard to see. I trabbed a tuberware container and collected as them as careful as possible, and put them in a 10 gl tank. That way I could see much better how the babies looked.Then I started watching them at first for crooked backs and obvious misshapes of their dorsal fins, and catched those out with a fine brine shrimp net.
My batch wasnt that big, less than 100, and I found quite a few with bends in their backs and not properly developed dorsals...
That is the first cull, for obvious mishaps and deformities. The rest is probably left over to the likes of the breeder. Some take those out who have webbed tails, some dont like fish with just one anal fin, some go for a particular shape of the tail and take out the ones who are lacking that trait. I would guess if somebody would breed telescopes and bubble eyes, they of course had to look for deformities here.
You could probably ask a few different breeders, and all of them would give you different answers on what they are looking for when culling...