Bots can be used for many different things; a bot herder can get the botnet to attack a website and take it down, botnets can also be used to spam emails, open unwanted links and, send packets to websites without you even knowing! Their are 2 types of botnets, 1 irc botnet and 2 http botnet. Irc botnet is controlling the botnet using a IRC server. This means the bots connect to your sever but rather than using chat commands the bot herder puts attack commands to mostly ddos websites. How to set up an irc botnet: http://adf.ly/WiMaw
Http botnet is using a webhost to control a botnet. Can do everything that a IRC botnet can do but I think its much more anonymous. You can download the following:
1: Cythisia Botnet v2
2: ubot
3: WarBot
4: VertexNetv1.2.1
Download the source here: http://adf.ly/crm9K
In this download you can edit the sources to make your own botnet!