The Blue Molotovs are glowing blue bottles with two power cells tied to the neck, when holding the bottle, it's on fire.
When thrown at an NPC, they will immediately catch on fire and run away screaming, catching other nearby NPCs on fire that they come in contact with, including the player.
Depending on how protected the NPC is, it is possible for the fire damage to run out before they die. Moving on with their usual behaviour afterwards.
The player needs the following items in order to craft the item: