To do this needs a world, our computer. All we need to supply is what nature itself supplies - energy and space. Think of the bits as functions, like genes. A one, say, in the first position may mean 'move left', in the second 'eat', the third 'look ahead' and so on. So our creatures can react to their environment and to each other.
Populations rise and fall, species become extinct, new ones arise.
You may have come across a problem in Game Theory called The Prisoner's Dilemma, where intelligent agents need to choose between options. In ALife simulations solutions to this problem can arise automatically. These echo the effects seen in Earthquake activity also. Sometimes such events occur spontaneously, a chaos related 'butterfly effect'. Randomly started systems force themselves, by system dynamics, to the parameters giving the greatest diversity and emergent order - we call it the ' Edge of Chaos '.