Unfortunately, those dots are -- as far as I know -- a special feature of Google's commercial Maps application (distinct from the maps api, v2 or v3), meaning it's unavailable for api use.
As for how it actually works, it appears they are not being added to the map in the standard fashion of the larger, tear-drop markers, each of which is an individual div being absolutely positioned on the map. The tiny red dots are actually a layer of image tiles being baked on Google's servers, and then these tiles are added to the map as images (I'm not sure how they're made clickable). Anyway, all this makes sense, because adding that many individual divs to the DOM burns up a lot of CPU. (Disclaimer: this is just my guess as to how it works).
All of which is to say: it's probably not a great idea to put that many markers on a map, unless you implement something like Google's tile solution.
UPDATE
It's been awhile, but it turns out you can do this, you just have to use Google's Fusion Tables service.
some documentation here