The Droid X and its successor the Droid X2 are both Motorola handsets running the Android operating system. Like most portable devices, they use LED lights as indicators. Unlike some devices and phones, the Droid X has a row of lights above the main screen, each in a different color. A blue light on your Droid X simply means somebody is trying to call.
The purpose of the colored light was initially unclear for many users as it's not detailed in the Verizon manual for either model. Motorola later added an explanation of the lights to the support section on its website. The lights are designed to cover the possibility of users having the phone in silent mode and missing a potentially important notification.
The blue light indicates that you have an incoming call. This light should always flash when you get a call, regardless of what other notification methods such as an audible ringing, an on-screen message or vibration are switched on or off. As with other notifications, the blue light will stop once you answer the call, the caller hangs up, or the call goes to voice mail.
A flashing green light indicates that you have at least one notification that you haven't acknowledged and cleared. This could be an email, missed call, text message or voice mail message. The green light appears only if you have your screen switched off and thus can't see the on-screen notification. The red light indicates that your battery level is low.
Exception to Default Setting
Some Android applications are able to access and use the lights on the Droid X for other purposes. This could involve changing the color of the lights, or changing what triggers a particular light. In most cases the application description should make this clear (and using the lights in a custom manner will be a key function of the app.) If your Droid X's blue light is flashing when you don't have an incoming call, review the apps you have installed on your phone. Removing all apps that use the lights should revert your phone back to the standard setting of blue meaning incoming call.