Little Alchemy allows you to mix items and create the world basically from scratch. You will start with four items on the right (air, earth, fire, and water). You drag one of the items into the middle of the screen and then drag another on top of it. This will then create another item - example - water and water creates a puddle. The newly created item you can see on the right hand side as well as stored in the Encyclopedia (hint there are 720 items to create).
If you ever get stuck, or just want to see what is created you can always use YouTube to see all the creations with a full walkthrough of all 720 items.
Embedded below is a 1 minute and 55 second YouTube tutorial I created.