If no initial value is provided, the cells are set to random values. If an initial value isn't provided for every cell, the provided sequence of values is repeated until every cell is provided for, going from left to right.
The seed is used to seed the pseudo-random number generator. If no seed is provided, the system will "randomly" choose one. It's useful to specify a seed here if you wish the results to be easily reproducible.
More information on cellular automata and their applications can be found in Stephen Wolfram's A New Kind of Science.