The process of making the cereal chains models the process of how proteins are made in a cell. The initial template represents a single copy of DNA that sits in the nucleus of a cell and gives instructions for how proteins are made. In order to get this information to an area where proteins can be made, it must be copied into RNA. RNA is very similar to DNA, but has a different form: this is represented by the handwritten notes.
The copying process is called transcription. Just like in a cell, a single DNA template gave rise to many RNA transcripts. In a cell, these transcripts move from the nucleus of the cell into the cytoplasm. The string you used to section off your instruction table represents the nuclear membrane that holds the DNA in the nucleus of a cell.
In the cytoplasm, a process called translation occurs: ribosomes use the RNA transcripts to assemble proteins from amino acid subunits. In cells, the genetic code dictates which amino acid residues correspond to a given DNA sequence. In the cereal chain, the letters in the instructions correspond to the color of the cereal.