"Streaming" and a "Live Stream" are two different things.
With streaming the way it works is this:
You have a static file (pre-recorded as you say) on the server, lets say that file is 10 megs in size. Instead of making the user wait a couple minutes for the file to completely download before they can watch, or listen to it, the player software will calculate the user's Internet connection speed, and based on that speed, will start playing the file before the entire file has been downloaded.
Think of YouTube. Sometimes you find an hour long movie but playback starts almost immediately and the rest of the file downloads in the background so that you can start watching the video (almost) immediately.
In the old days if you did not stream your content, you would have to wait a long time to enjoy your content.
.flv is the same technology YouTube uses and it allows you to stream content from static files to your site visitors "on demand" which enhances the user experience.
"Live Stream" Or "Live Feed" is something entirely different and is usually done using a ShoutCast Server (which I have here with GlowHost) and it allows me to host my Internet radio station so that I can play my MP3 files or talk to people (half-duplex) over the Internet in real-time, sort of like a regular OTA (over the air) radio broadcast.
Half-duplex means "one-way" communication....not to be confused with "full-duplex" which would be something like Skype or any other VOIP solution.
Flash video is a neat thing and works very well and I am happy GlowHost now supports it. I plan on making my own streaming video site very soon.