Seed pods were a type of fungus, either native to Mars or created by the Ice Warriors. These seed pods functioned by breaking down plants and biological matter (like other fungi). In an oxygen rich environment though, these seed pods grew at a much faster rate. This fungus was also released in a cold part of Earth.
These seed pods went through several stages. The first stage was a white round pod (hence the name). If exposed to air, it would swell up and release a cloud of spores. If these spores landed on biological matter, they would start growing and sucking up oxygen. These spores grew into a thick foamy substance which quickly covered the area. This foam would then grow pods, which repeated the process. It was estimated that after the pods covered sufficient area on Earth, it could bring down the oxygen content to 20% of the normal level. This would kill the humans, but would be perfect for the Ice Warriors.