Alien X is still at work here, so some information may be incorrect, incomplete, or just plain missing!
The Omnitrix was created by a Galvan named Azmuth sometime after Earth Year 1133. His intention was to make up for his parsimonious ways, bring peace between all intergalactic species, and provide a way to resurrect any species that could conceivably go extinct.
The Omnitrix's creation was generally kept a secret, but when rumors spread through the galaxy of its existence, many forces sought out to wield its power for themselves as a weapon; most notably, Vilgax the Conqueror.
At some point during the Earth Year 2006, the Omnitrix was being transported to be brought to Max Tennyson, considered to be one of the greatest Plumbers of all time. The device's transport ship was caught in a battle with Vilgax, and the Omnitrix was jettisoned for protection, and so it fell to Earth and crash-landed before a 10-year-old Ben Tennyson.
As his DNA registered close enough to Max's, the Omnitrix vaulted onto Ben's wrist and adhered itself with his DNA, granting him access to the first Playlist in Ben's Arsenal - The Original Ten.
With great experience and practice, Ben explored the potential of his transformations as well as the Omnitrix itself and grew smarter and more powerful with it with time. He has since unlocked the Master Control and makes it his mission to understand every transformation available, as he believes they all have a purpose. Ben uses about 400 transformations regularly and has become around 2,000 so far just trying them out.
Becoming An Alien
The Omnitrix organizes all 1,000,912+ transformations into sets of ten, known as "playlists". Playlists are either pre-programmed into the Omnitrix, organized in a way that diversifies the grouping of species, or is expanded upon whenever Ben obtains new alien DNA by scanning an uncatalogued species.
The Omnitrix transforms Ben into the healthiest physical peak of that species' potential, but only relative to his age. At age ten, he became a ten-year-old Tetramand, at age sixteen, a sixteen-year-old Tetramand, and so on.
The specific transformations Ben becomes also carry unique traits exclusive to Ben, but consistent enough with the original alien to be a plausible member of the selected species. Ben does not become an exact copy of the alien's DNA Sample, but a version of what he would be like had he been originally born as that alien.
When becoming an alien, the Omnitrix implements the alien's basic instincts and abilities into Ben's mind when his DNA temporarily merges with the alien*. This allows Ben to get a feel for the transformation's capabilities, but after some time in that form, Ben is usually able to push his transformations beyond their limit and use their abilities in creative and combative ways.
Ben names each one of his transformations to give them an identity. Some transformations' instinctive personalities are so overwhelming that they cause shifts in Ben's behavior when he uses them; however, Ben has gotten a lot better at controlling these transformations with time.
The Omnitrix is also capable of giving aliens specific equipment if they pose a danger to other people, like NRG and his armor. The transformations themselves also take place 0.8 seconds from each other.
*The Ultimatrix did not do this, as it was a hastily-built and incomplete Omnimatrix that was eventually shelved.
List of Playlists
The Parasite Playlist
Consisting of aliens such as Overkill, Slash, and DKR, this playlist is for aliens that can be used to enhance the abilities of already existing alien. It uses a two alien interface, requiring Ben to select a parasitic alien first, then selects the host body, depending on if the two are compatible. Heatblast, for instance, cannot be used alongside Overkill, due to fire being one of the main weaknesses of a Klyntar.
The Powerhouse Playlist
This playlist contains The Omnitrix's 10 most powerful transformations. These transformations are ordinarily locked on The Active Playlists but can be unlocked if the user enters code 4317. When activated, the vents on the Omnitrix in Uniform Mode light up.