Breeders use the term 'teacup' to mean an extremely small dog. However, it has no standardized meaning, so the definition can vary from breeder to breeder. Chihuahuas bred to the breed standard are very small to begin with, something that many people are not aware of because there are so many poorly-bred, larger ones around. The standard says this breed should not exceed 5 pounds.
Dogs that are too small cannot safely carry a litter. Depending on which breeder you ask, the lowest possible size is about 3 1/2 pounds. This means that larger females are required in order to keep creating tiny pups, who may have a tiny father. Sometimes a tiny pup appears in a litter from 'normal' sized (3-5 pound) dogs, as well.
Dogs are much closer in size when they are born than they are when they reach adulthood. This is why a Labrador can have ten pups, but a Chihuahua is usually limited to two or three. There are exceptions, but most litters will be less than five. Size at birth does not always translate to size at adulthood, though.
An experienced breeder can tell you about how big his or her pups get. He or she can also tell you about the sizes of dogs in the parents' background, and make an educated guess based on the size of the puppy at 8 weeks. However, no one will always be right. Don't choose size over health, because no one can guarantee the former and the latter is so very important.
Living with a tiny puppy requires some special care. One of the things that can afflict them that is not common in larger breeds is low blood sugar. This occurs when they do not eat often enough, and may require frequent feeding of special food for the first few weeks they live with you. Most dogs grow out of the problem.
Having a tiny bladder also means that Chihuahua teacup puppies find it harder to hold it when they have to go. Many people choose to potty-train using pads, paper, or a litter box, for this reason. Either way, frequent access to the potty spot is going to be required in order to house train them.