ok let us start, back early, we know about livedisk, where you can run OS from removable disk, where you dump the OS to the RAM. it was started with linux, but with bartpe windows live cd follows.
then linux introduce the use of usb for both live OS and OS installation, this took several years before we have windows 7/2008 that making installation windows using usb easy. you just need to use these four steps (two is essential):
– makes windows 7/2008 dvd ready in the drive tray.