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Live File System is the term Microsoft uses to describe the packet writing method of creating discs in Windows Vista and later, which allows writeable optical media to act like flash storage by replicating its file operations.
Files can be added incrementally to the media, as well as modified, moved and deleted. These discs use the UDF file system. The supported UDF versions for usage as a live file system are UDF 1.50, UDF 2.00, UDF 2.01, UDF 2.50 for CD-R, CD-RW, DVD±R, DVD±RW and BD-RE, and UDF 2.60 for BD-R.
The Live File System option is used by default by AutoPlay when formatting/erasing a CD/DVD -R or -RW.
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