In my display tank I started out with 70lbs of live rock and 150lbs of base rock, and something like 300lbs of aragonite sand (no live sand). After six months, all the rocks looks the same and the sand is most certainly live. "Live" rock will eventually seed "dead" sand.
As far as what this means, I think the key is bacteria. In my opinion what you are looking for is a combination of bacteria, worms and pods. Live rock should come with enough pods of various types to establish a healthy population, same with worms. The bacteria is inevitable, I expect even putting a single snail or something in a tank with just dead sand and base rock in it would eventually cause everything to become "live".
Live rock will also come with various crustaceans, molluscs and algaes, even the occasional eel.
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-Quinn
Man, n. ...His chief occupation is extermination of other animals and his own species, which, however, multiplies with such insistent rapidity as to infest the whole habitable earth, and Canada. - A. Bierce, Devil's Dictionary, 1906
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