How do genes in your dna stem cells to become different types of cells?

All of the cells within a complex multi-cellular organism such as a human being contain the same DNA; however, the body of such an organism is clearly composed of many different types of cells.

What, then, makes a liver cell different from a skin or muscle cell is the way each cell deploy (utilizes) its genome. In other words, the particular combination of genes that are turned on (expressed) or turned off (repressed) dictates cellular morphology (shape) and function. This process of gene expression is regulated by cues from both within and outside cells, and the interplay between these cues and the genome affects essentially all processes that occur during embryonic development and adult life.

Outside/Environmental cues include small molecules, secreted proteins (growth factors or signaling molecules), temperature, and oxygen.

The signaling molecules trigger intercellular signaling cascades (series of chemical reactions) that ultimately cause semipermanent changes in expression of genes. Such changes in gene expression can include turning genes completely on or off.

This process is thought to regulate a vast number of cell behaviors, including cell fate decisions during embryogenesis, cell function, and chemotaxis (i.e. cell movement in response to concentration gradient of a particular substance.)

they deliver oxygen to the blood

i am going to guess that it is co2.