Care must be taken to distinguish between a lateritic soil system and the duricrust material "laterite" which forms in such a soil.
Laterization is by far the most common soil-forming process in the Earth's tropics. If you ever took chemistry in high school, you probably had to perform a lab experiment demonstrating "chromatography". You were given a substance to analyze, and a solvent to dissolve it in. You were then directed to insert a piece of porous material (probably paper) into the solution (or drip the solution onto a piece
of porous material) and watch the results. After a while, capillary action would cause the solution to soak into the material and spread out from the point where the solution was introduced. Molecules of the dissolved substance would travel with the solvent for a while, but different constituents of the solution would come out of solution and precipitate onto the paper in colored bands. A given band's distance from the point of indtroduction depended on the porosity of the material, the evaporation rate of the solvent, and the electrostatic and chemical properties of the molecules itself.
If you now imagine the pourous material being soil rich in iron minerals, and the solvent being water (plus a few acids resulting from combining with other soil minerals), you can get a fairly good picture of how laterization works. Rain leaches away all of the nutrients in the soil, but iron oxides tend to collect in a band between 1 and 3 meters below the surface (although this layer can sometimes be 15 meters thick). "Laterite" is this band of iron concentrated-soil.
Laterite that is still covered by its surface soil, or still wet after being recently dug up, is a plastic substance that is easily cut. But when the soil is stripped away and the laterite is allowed to dry out, it amply demonstrates why it is called a "duricrust": it turns into an exteremely hard substance, much harder than other sedimentary rocks. This is the source of
its name: lateris is Latin for "brick". Often, the laterite will be pisolitic, breaking apart into a red gravel, but hardened laterite frequently forms a massive water-impervious surface. When a lateritic area undergoes desertification, the result can be a vast, hard surface that nothing can grow on. Large expanses of Western Australia's deserts are hardened laterite with a layer of sand on top.
Although laterite is not really a brick clay, it can harden enough to form a lasting building material. It has the dual advantage of being easy to cut while wet, and extremely durable while dry. Many historically important buildings in South and Southeast Asia, especially temples, are built of the stuff. Many of the impressive structures of Angkor have foundations or walls of laterite. The use of laterite in tropical countries, especially as a paving material, continues to this day.
Nature conveniently concentrates important metals in the process of laterization, and duricrusts can be used as ores. Although laterite can be used as an ore for iron, it is more important as a source of nickel and cobalt. Other duricrusts, particularly bauxite (which forms in an aluminum-rich soil), are the principal ores for some minerals.
Upon occasion, a stream will cut down through the soil to reach the laterite layer. When this happens, iron oxides will leach into the stream, making the stream bed appear to bleed. This brings to mind a story one of my professors once told me: A road cut being dug in Hong Kong in the early 20th century was interrupted suddenly when the workers hit a laterite layer. Believing that they had cut into the back of a dragon, the workers refused to finish the cut.