Xbox Live is an extremely awesome online service provided by Microsoft so people can collectively play against people online and make new friends and stuff.
It became highly popular with the release of Bungie's famed Halo 2 First-Person-Shooter. The number of Live users nearly doubled within a week of the game's release.
"Freddy! Get your ass on Xbox Live, nigga, we need to pwn us some n00bs."
"Shit son, be right on"