Live sand is much like
live rock, in that it provides a home for "
good" bacteria that provide
biological filtration in a
marine or
saltwater aquarium.
Live sand can be made to be live over time by simply adding reef sand in the right quantities and under the right conditions to an aquarium such that the bacteria being sought after will culture and grow.
Fairly recently (2002), live sand can be purchased or acquired in a form where it can be added to a new aquarium, shortening the initial ramp up of the Nitrogen Cycle in a new aquarium significantly.