From a technical point of view the "Living Images" appears to be the augmentation of a standard photo by the capture of a few additional frames before you press the camera capture button, thus allowing for the creation of a short animation that is intended to evolve the "way you view your memories". Nokia describes this as a way to "turn static pictures into living memories" and that it "deepens the way you capture and relive your pictures".
Essentially, the "Living Images" features combines a standard photo capture with Smart Camera Mode (burst) capture, albeit with a shorter burst length (around a second). Our assumption would be the the additional frame captures are at a lower resolution that the main image capture.
Live "Living Images" can be viewed in Windows Phone's standard camera roll, as shown in the embedded video, but can also be exported to Facebook and other social networking sites. Living images will also be created automatically when capturing photos using Nokia's Cinemagraph and Refocus will also appear as "Living Images", and will also be "bought to life" in the camera roll.
The images will also work with the new version of Nokia Storyteller that was also announced at Build 2014 that allows you to export stories (export video slideshows with "Living Images" and background music).
"Living Images" has currently only be announced for the Nokia Lumia 930 and will require an update to the existing Nokia Camera and Nokia Storyteller apps. However, in the Conversations story Nokia indicates that the feature "will also be brought to selected in-market devices during the next few months".
This means that "Living Images" is part of the Lumia Cyan software update, but, unlike other imaging features (e.g. updates Nokia Creative Studio) will not be available for all devices. It's a good bet that supported devices will include the Lumia Icon and Lumia 1520, but we would be less optimistic about the previous generation of devices (Lumia 920 / 925 / 1020) because of the processing resources required for the "Living Images" feature.