A firewall distribution is simply a distro whose primary function is to act as a firewall. A typical firewall distro might come on a bootable cd-rom or floppy disk, and enable you to transform a PC into a dedicated firewall appliance.
This usually costs a fraction of a similarly capable off-the-shelf firewall, especially if you already have an old computer. Running Linux, a 486 with 16megs of RAM, worth almost nothing, can outperform a dedicated firewall costing several thousand dollars. It will also be easier to configure if you are familiar with Linux and iptables/ipchains.
List of firewall distributions
Hard drive based
- picofirewall (picofirewall is NOT a firewall distro)
- Endian Community
- ClarkConnect - A hybrid of firewall and SOHO server (mail, fileshare, etc functions). There are paid, closed-source office and enterprise versions, and an open source, gratis version at clarkconnect.org. They all run linux. However, none of these are free (http://www.clarkconnect.com/about/eula.php).