"Made up of" can be thought of as "composed of (various components which together make a whole)". It is often used in the sciences to describe the composition of materials precisely.
"Made up of" is used to describe things that exist naturally which humans have analyzed in order to ascertain their "makeup".
"Made of" is generally used in less precise or less scientific constructions. "What is that made of?" "It's made of cotton."
"Made of" implies that humans have been involved in it's fabrication.
It may seem to be a subtle difference. You could say it either way (the meaning would be clear) but "made up of" is the correct way of saying this in this scientific context.
See also:
http://www.italki.com/answers/question/161737.htm
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AND NOW FOR SOMETHING COMPLETELY DIFFERENT with "made up":
----- An idiomatic use of "made up" = To "make nice" after a fight. To reinstate a relationship.
Offer retribution to make up for bad behavior.
"They used to be lovers, then they fought and they broke up a month ago. Last week they made up and now they are going to get married!"
"After she got mad at him for something stupid he had done, he made it up to her with flowers and a nice dinner."
---- Another use:
To invent a story, a complete fiction.
"I used to be a rocket scientist but I got bored and decided to teach English online." - "No way! You made that up!"
---- Another use:
"Did you see her in that wild dress? And wow! - she's wearing so much makeup today?" - "Yes, I don't understand why she is made up that way."