How do D flip-flops (dff) start up in Quartus?
What is actually happening here?


Your flip flops need a clock (minimum) and a reset (if you want them to be reset to a known state (you do). Like this:


Source: http://hep-outreach.uchicago.edu/samples/3bit_counter/

If you look at a d flip flop truth table a state transition requires a clock otherwise it will stay in the same state. 


Source: http://www.learningaboutelectronics.com/Articles/4013-D-flip-flop-circuit.php