How do people make video games
Plan first. Ask yourself a few questions not directly related to the game before you even start working: Is it going to be a short or long term project? Is it going to be done with a budget? Are you going to do this yourself or with a team? Is it going to be a small, casual game or a Crysis look-alike? What software will be used to create it? Are there any prerequisites such as knowledge in coding?
Think of a game to create. Once you have those questions out of the way, brainstorm initial ideas for any game and work out some basic factors like, genre (RPG, Action, MMORPG, etc), length, graphical detail, perspective (2D, Isometric, 3D, etc).
Refine your ideas. Keep brainstorming concepts of your intended game and refine them until you have a very specific game you are happy with. Once you have a clear idea of what you want to create, move on to more detailed ideas such as plot, characters, controls, actions/dialogue, NPCs (non-player controlled characters)/enemies, scenery, music and voice acting (if any), etc.
Start learning a programming language. The one that works for you is different based on what type of game you want to make. For a small 2D platformer, you can make it entirely in a high level language such as Lua, JavaScript, Python or others. For a 3D game you can use said high level languages or a lower-level language such as C++ (which is the de facto standard of programming in the gaming industry). There is also some software you can use in place or along with programming.
Get the software needed to make your dream game. Now that you've got a definite idea of what you want to create, you'll want to evaluate how skillful you are at coding and graphical design because games at their core are basically codes and graphics. Software can include 3D modellers, image editors, text editors, compilers, etc.