Karl Sims,a graduate from MIT who studied computer graphics and life sciences, used Darwinian evolution to come up with the block creatures in the video, along with their behaviors. As Karl says on his site about the project:
A population of several hundred creatures is created within a supercomputer, and each creature is tested for their ability to perform a given task, such the ability to swim in a simulated water environment. Those that are most successful survive, and their virtual genes containing coded instructions for their growth, are copied, combined, and mutated to make offspring for a new population. The new creatures are again tested, and some may be improvements on their parents. As this cycle of variation and selection continues, creatures with more and more successful behaviors can emerge.The last challenge shown in the video involves two creatures battling it out over a green block. Whichever is closest to the block at the end of the simulation is declared the winner. Some of the strategies for winning are actually pretty impressive, including what looks like actual hand-to-hand combat. Remember, this was done in 1994, when the beta for Windows 95 was released and Netscape was just founded.
You can read more about the technical aspects of this evolution system in Karl's paper here.