The dot is green if the user has been active on the site less than some amount of minutes ago. I think it's supposed to be 5 minutes, but I'm not sure. Red means they haven't (mostly because they're offline). SO basically what Healmeal said.
well this has been answered and may be locked.
......... *bashes russianfreak with a straw of grass*
It's true, but no need to say it for the mods... That's just pointless. A thread that has been answered can be reported to a mod for locking, but stating in the thread that it is available for locking is plain pointless.