"MOD WORKS" have 3 functions:
1. DISTILL - lets you mix 2 bio mods into another, probably randomly picked one. I tried mixing only biomods of the same type, so at this point I can't say if one can mix biomods of different types (i.e. weapon and armor). I did mix different colours and it worked, although I've got a "good" biomod from mixing 2 of the same colour and the "bad" one from mixing different colours. Quite obviously in my experiments I used only "bad" biomods. As for now I have no idea if it had any impact on the results.
2. PURGE - so far I only looked but didn't try this option, though from my understanding it works in a simillar way as "bio slug" cleaning choosen weapon or armor from biomods. No idea if you can pick which and/or how many of the biomods will get purged.
3. CREATE - that one lets you create a biomod by choosing one from the list of every colour and type. You're able to choose even those you haven't identified or found yet, although those will be named only after their colour and not the effect they provide.
Fixing damaged MOD WORKS is based on "engineering".
Distilling and creating new bio mods are based on "biotech"
mod works can be found on floor 20 and above