Live rock is actually pieces of coral skeletons that have broken off reefs during storms. This 'rubble' washes in toward shore where it is collected in shallow water.
Pacific live rock is prized for its high porosity which provides superior nitrifying/denitrifying capability, meaning it keeps your nitrates low.
Recommended amount is usually 1 lb per gallon.
It's also pretty when the proper algae takes hold. Hope this answers your questions.