The strict definition of oolite is limestone composed of rounded concretions. But in this hobby think of reef sand.
The deep sand bed consists of 4"-6" of argonite sand mixed with live sand. The live sand consists of a community including worm,clams,echinoderms, crustaceans,protozoa and bacteria. Ls is a biological filter. The worms cruise through the sand and eat the bacteria which cause them to reproduce. Included in the bacteria are heterotrophic bacteria which function under anoxic conditions and transform NITRATES into nitrogen gas. The worms also eat the detritus from the organisms in the tank.
If you combine this with live rock you could produce a self-contained reef enviroment that need only protein skimming, water movement, food and mineral supplements.
Now if you want and aggressive FO tank than you don't need the expense of ls or lr. But that's another story.