As explained in the post About cloning..., when we talked about "surrounding DNA stuff", we were talking about epigenetics.
Epigenetics is the study of changes in gene expression caused by mechanisms in the underlying DNA sequence, some of which are inheritable. In other words, we do not depend only on our genetic code plus the environment to be as we are, we have our "genetic environment" inside that makes us different.
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Differentiation process. Picture from www.systembio.com |