A LiveCD is a CD-ROM (or by extension a DVD-ROM or USB key) which allows a computer to boot from it directly. Live CDs generally leave the harddisk completely untouched, with the exception of using partitions marked as swap partitions. Live CDs typically run Linux or BSD and are substantially slower than running the same operating system and software from the harddisk. Work done when running a Live CD is typically lost when the computer is rebooted, unless the work is explicitly saved, across the network, to the harddisk or to a USB key.
Live CDs do typically use a swap partition if they find one on the harddrisk and thus run substantially faster. Swap partitions are "scratch pad" areas of the disk widely used in the linux and unix world.
Differences between Live CDs
There are a number of Live CDs around, with very different goals:
Knoppix is a Live CD aimed at techies and self-perpetuation - it contains all to tools needed to make new Live CDs. It is the tool of choice for techies when dealing with machines in such a bad state of repair that no longer boot from the hard drive due to viruses, disk corruption or operating system failure. It is also available in DVD version. It is closely allied to the debian linux "testing" distribution. It is available for x86 only. http://www.knoppix.net/
OSS Watch Knoppix is a customisation of Knoppix with samplers educational software, including Moodle and Bodington added. http://www.oss-watch.ac.uk/resources/osswatchknoppix402.xml
Ubuntu Live CD is a Live CD aimed entirely as a taster for the installable Ubuntu Linux. It is available for multiple platforms, including PCs, 64bit PCs, and Power PCs (Macs). It is available in Ubuntu and Kubuntu versions, which feature the Gnome and KDE window managers respectively. http://www.ubuntulinux.org/
Damn Small Linux (DSL) is a Live CD which aims to be a complete but minimal linux system taking as little space on the CD and in memory as possible. DSL is primarily used as a basis for other Live CDs, usually those which want as much custom content as possible and don't mind lack of expected features and polish in the GUI. http://www.damnsmalllinux.org/
"LiveCDs as a forensic tool" http://www.oss-watch.ac.uk/resources/forensics.xml
List of LiveCDs at Frozen Tech http://www.frozentech.com/content/livecd.php
Distro Watch reviews linux distributions and LiveCDs http://distrowatch.com/