It was only a thing in the 3rd Ed codex.
You started by picking one of the 'mutable' species- Gaunts, Warriors, Ripper Swarms, Carnifexes, or Hive Tyrants.
Then you picked biomorphs, altering their stats. Eg you could boost WS with adrenal glands, BS with enhanced senses, Sv with enhanced carapace, or give them leaping or winged movement. Then you chose weapons.
Different upgrades could shift around what slot a unit occupied. Warriors were normally HQ or Elite, but if you gave them more than one heavy weapon they became HQ or Heavy Support, or if you gave them wings they became HQ or Elites.
Once the total number of species for your list was determined- your homebrew species plus whatever 'geno-fixed' default entries you wanted (every unit besides the above five)- then you moved on to mutants, where members of a squad could have abilities like acid blood, synapse, gargantuan size, or an abnormal weapon. The number of mutants per squad was one per X models, where X was the number of species in your fleet.
The 4th Ed codex got rid of all of this and instead worked the unit upgrades directly into the codex entries. That's where the endlessly customizable plastic Carnifex came from, because in 4th Ed you didn't need three different species in order to give wildly different upgrades to three different Carnifexes.
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