More info: https://support.apple.com/en-us/HT207310
... _and_ a still photo. You don't lose the full-resolution still photo, and the still photo isn't simply a frame from the video. In case anyone's curious.
In other words the video is exactly the same quality as the photo in each frame so you can pick a moment a second later for example if you film something fast moving.
Does anyone know how it works and isn't gigabytes in size?
You can change the keyframe on a live photo (ie the image displayed first) from the still capture to a video frame, but I generally would never do this due to the quality drop. It adds a little more memory context to a still photo, its not a burst capture tool.
There are actually some features with live photos I hadn't seen before though that are kind of interesting, for example you can fake a long exposure shot via a feature that interpolates information from the video stills into the main image:
https://osxdaily.com/2018/01/10/take-long-exposure-photos-ip...