Can anyone explain to me how exactly new tokens are created, and how they arrive at their value? Is it crowd funded? Are the tokens pegged somehow to bitshares?
Regarding assets, there are two types of assets:
Market assets, and User assets.
User assets are just like assets in NXT or other coins. Some user created them, and they have no backing. They only have any value if you trust the person who created them.
Market assets like bitUSD, bitGOLD, etc are a whole different animal.
They are market pegged assets which are backed by Bitshares. That is, Bitshares (BTS) is used as collateral for them. In order to create them, someone must put aside enough BTS to back 300% of the value of the market pegged asset they want to create. If they ever fall below having 200% collateral, a margin call is automatically issued.
This is all handled BY THE BLOCKCHAIN. Not by any centralized, trusted authority! Therefore, market assets are backed by BTS itself, and this is enforced by the blockchain itself.
So how does the blockchain know what price these assets "should be" so that it can enforce margin calls and ensure that holders of the assets get their value? The delegates who create the blocks of the Bitshares blockchain provide price feeds, which tell the system how much the assets are worth. Thus, as long as you do not corrupt most of the delegates, the system works. Delegates are the Bitshares equivalent of Bitocin miners.
The delegates are elected by holders of BTS, who want to elect trustworthy delegates to produce blocks.
If so, how does the conversion to the new token work exactly?
People buy and sell them on the bitshares decentralized exchange. This is a free market, so you can buy or sell at whatever price others agree to pay. So you are not guaranteed to get the 'fair' price for your asset if you need to sell instantly (but it should be fairly close). If you are willing to wait a little bit however, you are pretty much guaranteed an opportunity to sell your asset at the fair price. The more users and liquidity that bitshares gets, the better this will be.