Yes — it’s true. Poultry is sometimes mechanically separated and when it is, the resulting product is called mechanically separated poultry (MSP). It is NOT true, however, that this is how chicken nuggets are commonly made. The vast majority do not contain MSP. Nuggets are usually made from pieces of white meat and sometimes from a combination of white and dark meat.
Some processed meat products, like hot dogs and lunch meat, do contain MSP and this is stated on the ingredient label by law. This process is regulated and inspected by USDA, and if used, is included in the ingredient statement.