A simple and straightforward Geometry Nodes setup, creating the effect of a dancing and morphing blob from a grid of rotating capsules.

The number, dimensions and other properties of the capsules are fully procedural and customizable, along with the rotation speed and variations.

The morphing effect is achieved by modified Noise Textures. 

The Blend file contains detailed explanations and the labels attached to each node.

Video demo - 1, 2, 3.

Happy Blending !