We present a comprehensive study of the step-emulsification process for high-throughput production of colloidal monodisperse droplets. The 'microfluidic step emulsifier' combines a shallow microchannel operating with two co-flowing immiscible fluids and an abrupt (step-like) opening to a deep and wide reservoir. Based on Hele-Shaw hydrodynamics, we determine the quasi-static shape of the fluid interface prior to transition to oscillatory step-emulsification at low capillary numbers. The theoretically derived transition threshold yields an excellent agreement with experimental data. A closed-form expression for the size of the droplets generated in the step-emulsification regime and derived using geometric arguments also shows a very good agreement with the experiment.