The Debian Live system is a Debian live distro. It runs from media (such as a CDROM or a USB-stick) or over a network. Debian Live uses only official packages from the Debian repository - the "main" section (and possibly the "contrib" section). The "non-free" section is not used at all for the live system. What this means is that not all the software available to Debian users is provided in the live distro. You must install Debian on your hard drive if you want to have access to all the software available.
The Debian Live project does not change any packages. This means that it is the only live distro to be 100% Debian.
Creating the Debian Live CD
There is a NewbieDOC HOWTO at http://newbiedoc.berlios.de/wiki/How_to_try_out_Debian_GNU/Linux_without_installing_it .