What’s the red dot at top of the Apple Watch screen mean?

This is to tell you that you have at least 1 notification,swipe down on the watch face to read it.

On my watch I have the red dot but there is a black circle around it. What does that mean? Also every time I select something it puts a box around it.

That might be assistive touch,check in settings/accessibility and see if assistive touch is turned on and turn it off.