Each square represents an individual. A column of individuals represents a population. Individuals with similar colors are more closely related, and are more able to breed. Individuals with colors too far apart cannot breed with each other and are therefore different species.
Individuals in generation 1 and generation 7 are too far apart to interbreed. They are therefore different species.
But there is no point of speciation. There is no point at which a parent produces an offspring which is a different species from itself. Speciation occurs over many generations.