Unfortunately they wanted a way to add Dreamcast content to music CDs ("MIL-CD"), which led to a massive holes in the security that meant it would happily boot off CD-Rs. I guess they didn't want to tie record companies to Sega's own duplicators so the CDs don't have any direct copy protection. Instead CD programs are "encrypted" (unlike GD-ROM games) and the disc drive turned off after initial load. Naturally the encryption / scrambling was figured out, and people figured out how to turn the drive back on[1]. Thus fun with piracy and homebrew. Late in the production run they removed the MIL-CD stuff entirely, although the vast majority of systems out there would've been built by then.
(Sorry if I've got any details wrong).
[1] Plus a bonus that the boot sector could contain unchecked extra code that made "self booting" pirate games possible.
Copying itself from the source discs (GD-ROMs that had their grooves packed closer together than a traditional CD for extra capacity), from what I can remember reading, was primary done via a dreamcast console (perhaps initially it was done via a development kit) and a serial cable or ethernet adapter.
I think over the years more means of doing the GD-ROM copy became available, like firmware overwrites of certain PC drives.
Now you can pull almost every retail Xbox game off of internet archive and throw nearly all of them on to a massive multi TB HDD.