Speaking technically, methanol isn't produced during distillation, it's concentrated. Since it boils at a lower point than ethanol, it disproportionately comes out in the "heads" of a distillation run. The source wine/beer/mash already has all the methanol in it, it's just it's not a problem when present in the small quantities in a non-distilled drink, alongside with a much greater amount of ethanol. (Ethanol can actually act as an antidote to methanol since your body processes it first and can then excrete much of the methanol unmetabolized)