You aren't mixing all the powdered sugar in. When you go to roll it out the excess little balls of powdered sugar "explode" leaving little craters. Take some extra mins to knead you fondant a little more or maybe try rolling it out first then re-kneading it if necessary. I know its alot of work... lol
Hope this helps!
Going along with the last response, you might also try sifting your powdered sugar as you mix it in. I know I have problems with little clumps of hard powdered sugar.
It's also a good idea to add shortening as you knead it and also glycerine-this helps it stay moist & keep it's stretchy texture. Try to stay away from adding extra powdered sugar either.
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