HTTP-FUSE-KNOPPIX is a "pile-up" KNOPPIX linux distribution. HTTP-FUSE KNOPPIX downloads pieces of Root Filesystem from a HTTP server when the piece is requested, although normal KNOPPIX requires whole 700MB ISO image at first. The piece is "piled up" on your PC.
The first minimum parts of HTTP-FUSE-KNOPPIX are bootloader with "Linux kernel" and "miniroot". The size is only 6MB. The rest of parts "ROOT file system" which size is 700MB is downloaded on demand as a small piece of block device.
The original block device which includes ROOT file system is split into small data-piece. Each small data-piece is compressed and saved to a file. The files are called "split-and-compressed block files". Split-and-compressed block files is downloaded when it is required. Split-and-compressed block files compose a virtual block device with HTTP-FUSE.
HTTP-FUSE-KNOPPIX selects ROOT file system at boot time. It means HTTP-FUSE-KNOPPIX doesn't make a CD-ROM for customization. It just upload the customized Root File system on HTTP server.
Furthermore the uploaded "split-and-compressed block files" for customized KNOPPIX are difference only. The most split-and-compressed blocks files are shared between original KNOPPIX and customized KNOPPIX. The feature makes small volume of a server when customized KNOPPIX is added.