Why is creating a new object successful for this Kata whereas if chars[index] = chars[index].upper() is used all outputs are Uppercase?

Here's a quick breakdown comparing:

x = y

x = y[:]

x = y.copy()

https://www.programiz.com/python-programming/methods/list/copy

yes, [:] creates a new object

Yes, the last is another reference to the same list, not a copy at all.

def dot_product(a, b):
    for d in dir(a):
        print(d)
    # code
    return -1