First, some definitions:

FileA: This is the LiveCD.iso image offered for download.

FileB: The root directory you see on a mounted CD (not booted)
after you've downloaded FileA and 'burnt its image to a CD'.
This CD root directory contains boot, and KNOPPIX directories, and some
small files. The boot subdirectory contains an isolinux subdirectory.
The KNOPPIX subdirectory contains an empty module subdirectory,
a large KNOPPIX file, call it FileC, and some small files.

FileC has no file designation, per se. I believe it to be a
compressed Knoppix filesystem.

One usage of these files is not only to make a LiveCD, but also to
use the LiveCD to make a LiveUSB. In this case, FileB LiveCD
contents are adapted to create a self-booting LiveUSB. The LiveUSB
can be used to further modify itself to incorporate a unique persistent
store capability. This new capability allows the USB to retain system
changes for subsequent reboots. These changes are retained in a file
called knoppix-data.img.

The liveUSB has a similar FileB (mounted, not booted) appearance.
This USB root directory contains boot, and KNOPPIX directories, and some
small files. The boot subdirectory contains a syslinux subdirectory.
The KNOPPIX subdirectory contains an empty module subdirectory,
a large KNOPPIX file, the same FileC I presume, a new large file
knoppix-data.img and some small files.

In the 6.4 version of Knoppix there is a cheatcode 'fromhd' which is
intended to allow selection of different versions of Knoppix to be
selected at boot time. Supposing you had the foresight to have several
different knoppix FileB's stored on say /dev/sda1 like /dev/sda1/FileB1,
/dev/sda1/FileB2,... /dev/sda1/FileBn. And suppose your LiveUSB is
on /dev/sdb1. Supposedly you could use your sdb1 LiveUSB to boot up
using the cheatcode fromhd=/dev/sda1/Filem, ignoring some sdb1 FileB
code and instead using parts of /dev/sda1/FileBm to boot.

At this point one might conceive of a yet another cheatcode that
would take the current knoppix-data.img in /dev/sdb1 and incorporate
its changes into a revised compressed KNOPPIX FileC and save it with
appropriate supporting files as a new candidate /dev/sda1/FileBx.
I would have called this new cheatcode 'tohd', but that name is
probably taken.

If the new candidate /dev/sda1/FileBx doesn't work out we can fall back
on earlier sda1 candidates or even sdb1 if necessary.

So what's not to like?