Technique
A read-only file system, such as on a CD-ROM has the drawback of being unable to save any current working data. For this reason, a read-only file system is often merged with a temporary writable file system in the form of a RAM disk. Often the default Linux directories "/home" (containing users' personal files and configuration files) and "/var" (containing variable data) are kept in ramdisk, because the system updates them frequently. Puppy linux has a savable layer so if you choose to, the next time you boot you can resume (pick right back up again) from where you left off. Each time the CD boots, it looks for the file and then uses it if it has the right name.
In modern live CDs, a read-only file system is merged with ramdisk using transparent techniques such as UnionFS, AuFS or EWF. In MS-DOS and OS/2 systems, ramdrive.sys, can be loaded at boot for this purpose. Boot loaders like syslinux can boot ISO files from USB memory devices.
Live CDs have to be able to detect and use a wide variety of hardware (including network cards, graphic cards etc.) in realtime. This is easily achieved nowadays by udev, hotplug, hal, udisk etc.. which is a common part of all distributions based on Linux kernel 2.6.
Read more about this topic: Live CD
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—Rebecca West (1892–1983)
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—Ezra Pound (1885–1972)
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—Aldous Huxley (1894–1963)