I am running Ubuntu live without any hard drives installed in my pavillion and there is a 3.1 GB file system. It is not on the DVD-r that I put Ubuntu live on. It also appears that someone is manipulating the info and tweaking my live session. How is this possible?
More seriously, a few things - firstly that the filesystem on the disk is compressed with squashfs, any changes are temporarily stored in a ramdisk, and lost when you reboot. All this is abstracted away into a single file system through unionfs
The 3.1gb filessytem you see is the unionfs file system, and squashfs makes it possible to fit all that into the livedisk.
Like I said, its magic ;)