To remix someone else's reel, tap the menu icon. You can record a new video in the Instagram app or upload a pre-recorded one from your camera roll. There are some editing options, including ones for audio, effects and playback speed. The feature is enabled by default on new Reel uploads. You can for older videos via the menu on each post.
You'll be able to see other users' remixes of your reels through the activity tab. Remixes you've made of other videos will pop into your profile's Reels section.