A USB image is a way to boot a computer from a USB flash drive

USB flash drive

A flash drive is a data storage device that consists of flash memory with an integrated Universal Serial Bus interface. flash drives are typically removable and rewritable, and physically much smaller than a floppy disk. Most weigh less than 30 g...

, or another USB device. The operating system

Operating system

An operating system is a set of programs that manage computer hardware resources and provide common services for application software. The operating system is the most important type of system software in a computer system...

 loads from the USB device to make it usable. Much like a Live CD

Live CD

A live CD, live DVD, or live disc is a CD or DVD containing a bootable computer operating system. Live CDs are unique in that they have the ability to run a complete, modern operating system on a computer lacking mutable secondary storage, such as a hard disk drive...

, a USB image runs off of the USB device the whole time.

Ubuntu has included a utility for installing an operating system image file to a USB flash drive since version 9.10.