Blue Dot at the top of IPhone 7
I've Googled this, and researched this question to all corners of Earth and had a different answer from everyone who posted an answer. This is what I've learned......first nothing is wrong with your phone - PERIOD. The thing you're looking at is the front facing facetime camera. The blue dot shows when the light reflects in the lens. Try this, walk into a dimly lit room, look no more dot. Now walk into a well lit room there it is again. For reference, google IPhone 7 User Guide and click on set up, then overview. It shows the face of the phone and marks that blue dot with a "D". There you go.
iPhone 7, iOS 10.0.3