For example you have a puppy who is shy, lets put it on a rank from 1 (being extremely shy) and 100 (being extremely confident). Your puppy may have a genetic range from 1 to 10, a narrow range where training and behavior modification can bring your puppy from a 1 to a 10 but genetics does not allow it to go past 10. Or you may have a puppy that has a genetic range from 1 to 50, with behavior modification and training you may be able to take this puppy to a 50 which is pretty good. As you can see genetics play a large role and the potential for change is already hard wired into your pet.
Through socialization we can see a puppies response to certain stimuli and move them up or down on their genetic scale depending on how we socialize them.
Lets go back to the shy puppy. We can move this puppy down (or make it more shy) by keeping the puppy in the house and not getting it out and exposed, using abusive or compulsive training techniques or simply by the puppy having bad experiences when it tries to build confidence. By "socializing" or getting your puppy out of the house and having GOOD experiences (which is key here) you can move that puppy to its maximum genetic potential.
We can't CHANGE genetics through socialization but we can move our puppy or dog to its farthest point on its genetic range. Socialization is especially important for young puppies because we want to expose them to as much as we can to see what type of reaction we get and if its a negative one we can work quickly to reverse it.