I am not a biologist so forgive me my ignorance but when people say that DNA is the blueprint for an organism I never understand how a bunch of proteins can determine an organism's shape and behavior. Aren't there more factors that determine those things, like the surroundings in which the DNA is used, like chemicals that the growing organism is surrounded with, temperature, etc?
You're absolutely right. Microenvironment -- the cell's chemical, mechanical, and physical environment, determines which genes are switched on, whether those proteins get made, and how and whether they interact with other proteins to alter cell behavior.
This has been a challenge (and perhaps even a failure) of many current genome projects, which are often reductionist to the point of ignoring much of these features, whereas "context" may well be more important than the genome.
There was a big splashy paper in the New England Journal of Medicine last year, where multiple regions of a single tumor were sequenced. It was found that while there were significant differences in the genome across a single tumor, the cell phenotypes (their behavior) was much more convergent. That is, even with significantly different genes, these cells found a way to function similarly when presented a similar environmental context.