A live USB is a bootable usb drive that contains an operating system that can be used without being installed. Essentially, you can stick this usb into any computer/laptop that can boot from a usb drive and you'll be able to load this operating system without having to install anything.
Most Linux distributions give you the option to install the operating system on your hard drive if you'd like to, but it is not necessary.
Keep in mind that unless you install the OS, the USB will boot into a "brand new" OS each time and none of your updates or settings will be saved. You can save files as long as you make sure to save it on a separate USB or hard drive.
This is useful in cases where you don't want to save any files/settings.
A good example is when you are using someone else's computer and you don't want to leave a trace.
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