Linux From Scratch
Linux From Scratch is exactly what its name implies. The LFS team has created a guideline to follow in order to create a base system. The operating system is built from the compiler up. Starting with a host distribution such as Fedora, Gentoo, or the recent LFS LiveCD, a toolchain is created on the target machine followed by the basic system software. The process culminates in the compilation of a Linux kernel, installation of bootscripts, and configuration of system files. Upon reboot, the LFS System boots to a command line.
Once the base system is complete, or before it is complete, one can start adding packages, experimenting, or following the BLFS (Beyond Linux From Scratch) Guide to complete a personal OS with GUI and all. LFS can be an effective way to understand what "goes on" behind the scenes, though potentially time consuming at first.
This approach allows a fine degree of granularity and personalization such that one has a more exact account of what comprises the system. On the other hand, LFS does not provide a package management system. It is left to the user to manage the software, dependencies, and upgrades/updates.
The LFS team's most recent addition to the Linux community is the Cross Linux from Scratch (CLFS) book. CLFS teaches you how to make a cross-compiler and the necessary tools, to build a basic system on a different architecture. CLFS also takes advantage of the target system's capabilities and provides instructions for building a multilib capable system.