Comment by idiotsecant

It starts with bleeding. The blood in the region of the bones forms a squishy mass that is not bone, but through which cells can flow. Specialized cells deposit calcium into this mass, guided by hormonal and chemical signals. If you imagine the two open bone ends as emitting a sphere of chemical signals, where the two spheres interfere constructively is where the 'signal' is strongest and where you want to deposit calcium. Bones are not just calcium of course, but that's the gist.