Change is a good thing. Unfortunately, when you are making big changes to your site or application, there is always room for error. Live-state snapshots takes the idea of a "backup" and takes it forward to its next logical step. Taking a snapshot of your partition not only creates a backup of your files, but also all of the processes running in the background at that instant in time. This way, if you make an error or break something while making updates, you can revert your partition to that exact snapshot, providing a working, fail-safe rollback.
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So that could be either a virtual machine - an operating system running inside another operating system, or a virtual private server - you rent a virtual server from a company, so you have your own internet-facing server running 24/7 relatively cheap (since it's not a real server, but one of many virtual server running on an actual server). I think he might have meant the later, since you'd have to run a snartnofe (btw I love that name) non stop to benefit from it.
A virtual server and a dedicated server differ by the number of users that possess resources on a physical server. With a virtual private server, some of the resources are isolated for individual users, but there are multiple users on the same physical server. With a dedicated server, a single user has access to all of the resources of a physical server.

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