Its a way of making a custom Windows install CD or DVD
http://www.nliteos.com/nlite.html
Ive made a CD for XP that has SP2 on it, my original XP Cd didnt have any service packs, its a lot faster loading the custom CD then the original then SP2, and yes you can put custom drivers onto it if you wish.
Vista is a slug, I wouldnt touch it unless I had a Core Quad with 3 gb ram and a top end video card