It's not really new, various distros have been made up from compressed modules before; usually small ones that fitted & ran from memory at 'lightning speed'.....
Personally, I quite like this modular approach, programs can be added as & when needed, & then just deleted when done with, all dependencies usually taken care of either in the base module or in the module to be loaded.
@camtaf :-
It's exactly the same approach Puppy takes. The entire system loads into a virtual RAMdisk from read-only files, so the 'base' system never changes (and can't be corrupted). Puppy's traditional SFS packages are loaded "on-the-fly" as needed, then unloaded again when finished with. The more modern range of Puppy-portables that I myself developed, with help from several community members, can all be run from a flash drive if required, a la Windows PortableApps.
Personal configuration changes are usually added-into what's known as the save-file or save-folder. However, it's become quite popular amongst our members to customize the system so it's exactly how you want it, then re-master the entire thing so that even your customizations become read-only.....and your Puppy loads in an expected, identical state at every boot.
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This is where the Puppy-portables come in useful. They don't need to rely on having config files already present in the system; all config stuff is created & stored within the portable's directory by making use of the XDG Base Directory specification, setting a read-link for that directory, and making the directory itself its own $HOME. Thus, everything required is external to the base Puppy.....even additional dependencies, if needed, which are taken care of by specifying LD_LIBRARY_PATH to libs within the portable directory.
It all works rather nicely, if I'm honest.
Mike.