The horizontal axis represents time, and the vertical axis represents a percentage of the population. When a mutation enters the population, it occurs in only one individual and is plotted as a point somewhere on the x axis. If the mutation is passed on, for example to four new offspring, then it will be in a higher percentage of the population at the next time step.
Most mutations will soon drop out of the population. Either the individual where the mutation originates will not survive, or if it does survive and mate, by chance it may not pass the mutation to its children. Even then the children may not pass the mutation any further. Mutations that eventually die out show up as inverted ``V'' shapes in the figure: they are introduced, they are passed on to some proportion of the population in the next few generations, and eventually the percentage drops to 0 as the mutation disappears.
Some small percentage of new mutations are passed on successfully. If by chance the mutation continues to spread in each successive generation, it may reach a point when it occurs in every individual, i.e. it becomes fixed. When a mutation is fixed, it is automatically passed on to every succeeding generation with probability 1.0 (unless there is a ``back mutation'' that changes the locus back to its original form, but this is a very rare event).