How does the body know that you've donated or lost blood and to make more?

It's all down to the kidney. Your kidneys secrete a hormone called erythropoietin, which stimulates the bone marrow to make new blood cells. What makes the kidney do that? Well the kidney has all these chemical sensors in very tiny blood vessels and it measures how much oxygen is present in the tissue and infers from that how well the red blood cells are working. In other words, how many red blood cells there must be and how well your lungs are working. If your oxygen level drops a little bit, your kidneys assume that you haven't got enough blood and makes this hormone erythropoietin and you make more blood cells. So that means that when you go up a mountain and the oxygen levels drop, your kidney would notice that it's not getting as much oxygen as normal and would therefore boost the amount of erythropoietin. This makes the bone marrow make more red blood cells and solves the problem. That's why you end up with thicker, heavier and denser blood if you spend time at altitude. This is also why athletes like training at altitude because it boosts the amount of oxygen an athlete can carry.