Dotbots are made up of groups of linked circles that expand and contract. The dotbots don't react to each other, but the circles within a dotbot do. Each circle expands or contracts depending on whether certain other circles are expanded or contracted.
You can make mutated copies of dotbots by mousing over them and pressing "M". Or, you can make exact copies (mouse over and press "C") or you can delete them (mouse over and press "D").
Make some mutations, and then make more mutations of ones that you like (whether they're pretty, they move well, or whatever). It usually takes a while to develop anything interesting, but it happens. The dotbots won't be writing novels or making coffee anytime soon (sorry Micah), but you may get some that are really mobile or pretty.
You can make particular changes to a dotbot by clicking on one of its circles, which inverts how it reacts to the other circles it's linked to. I didn't put this in the on-screen instructions because it's pretty tedious compared to making a bunch of mutants.