How do i make all circles flicker

You need to draw all the circles in a loop with a different color in each frame:

void draw() {
    background(255);
    fill(random(256), random(256), random(256));
    for (int i = 0; i< numPointsX; ++i) {
        circle(xPos[i], yPos[i], DIAM);
    }
}

Complete example:

float colour = random(256);
final int DIAM = 20;
final int MAX_NUM = 1000;
int numPointsX = 0;
int numPointsY = 0;
int [] xPos = new int[MAX_NUM];
int [] yPos = new int [MAX_NUM];
boolean start = false;

void setup() {
    size (500, 500);
}

void draw() {
    background(255);
    fill(random(256), random(256), random(256));
    for (int i = 0; i< numPointsX; ++i) {
        circle(xPos[i], yPos[i], DIAM);
    }
}

void mouseClicked() {
    insertXandY();
}

void insertXandY() {
    int x = mouseX;
    int y = mouseY;
    
    xPos[numPointsX] = x;
    yPos[numPointsY] = y;
    
    numPointsX += 1;
    numPointsY += 1;
    start = true;
}