The red dot is the sight adjustment screw - it and the front sight blade are made of translucent red-orange plastic, the idea being that they will pick up ambient light and give a very high-contrast front sight, like the Hi-Viz fiber-optic handgun and shotgun sights. It's the same sighting arrangement as on my .40S&W KelTec Sub2000.
Personally, I'd much rather the front sight was steel, with steel-on-steel click-detent adjustments, like an AR15 - when I get my grubby mitts on a SU-16, if Kel-Tec is still shipping them with plastic sights, I'll give the rifle into GG&G's capable hands and have them replace the front sight with a flip-up AR15 unit that they make.