This texture replaces the "color","reflect" and "filter" attribute with specified values. It is as if you placed spheres of a specified size in a 3-d grid pattern, and where the object's surface cuts one of the spheres, you get the specieied color, etc.
The texture axes define a boundary betweed adjacent "cubes" in the grid ... and the spheres are at the centers of the cubes ... so in mapping this texture to a "plane" or "ground" object, you should offset the texture axes from the surface, by half the "dot spacing" that you specify.