The popularity of live CDs has waned a little bit over the years, for a couple of reasons. One of the big reasons a lot of users chose a live CD, initially, was the difficulty of installation. Back in the day, Linux just wasn't as easy to install as it is now. And many users liked to use Linux on a live CD to get the hang of it before trying to dual-boot with Windows or replacing Windows altogether.
By the way, while we're talking about live CDs here, you're not restricted to CDs for most Linux live distros. Some ship full DVDs of software, and most are bootable from USB as well in case you have a netbook or other machine without a optical drive — or just happen to prefer carrying a USB key over a CD or DVD.
Selection criteria: So how were the distros chosen? You'll notice that none of the major Linux distros (a.k.a. Ubuntu, Debian, Fedora, openSUSE, Slackware, etc.) appear in the list, though most of the picks are derived from one of the major distros. Though Ubuntu, Linux Mint, et al. have perfectly serviceable live CDs or DVDs, they're not really designed for long-term use as a live distro. I'm sure some folks do use them that way, but they're the cream of the crop for installing to a hard drive — not for live media.
When choosing the best of the many live media Linux distros out there, I looked for distributions that are actively being developed, that serve a specific and useful purpose, and should be useful to a fairly wide audience. To that end, I picked from end user distros as well as utility distributions that are used for specific tasks.
Read more: Linux.com