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Volatile bits will vacillate between two states: green and red, spending some tens of seconds in one state before switching to the other. In its green state, shooting the Volatile Bit will cause it to fire homing corrosive bolts at nearby enemies. In its red state, shooting the Voltaile Bit will cause it to fire homing healing bolts at nearby Vault Hunters. Once the bit has been shot, it will remain inactive for a short while before becoming active again.
Landing on top of a Volatile Bit will cause it to activate as well, and if it is jumped on while in the green state, the corrosive bolts will generally hit the Vault Hunter instead of enemies.