A top-down approach to inventing a species means viewing a species at a high level and working our way into details. We might decide on a sea-dwelling species and then face more detailed questions, like whether they have gills or can survive out of water. Can they walk on land? Are they seen often or rarely?
The bottom-up approach means creating details first and then slowly integrating them into a unified whole. Maybe we first decide on a species with sharp claws, a barbed tail, and which is rumored to carry people off at night while seldom being seen, and there’s almost no trace of where it went. From this and other details, perhaps we decide this species is water-dwelling and the claws and tail are used for catching fish. The reason people disappear is that they’re taken underwater and drowned, or perhaps held captive in underwater caves that have oxygen pockets, and since our species quickly enters the water from docks, there’s no trail to follow. This big picture is suggested by details we created first.