Custom FirmWare. Firmware created for hackers, that are mainly used on gaming consoles. For example, Luma3DS is a well-known CFW for the 3DS consoles. Nintendo CFWs usually feature Homebrew, which contains applications that aren't officially authorized by Nintendo.
Literally meaning Custom Firmware. The process is mainly created using A Magic Memory Stick (MMS), modded firmware found anywhere using Google, and last but not least, a Pandora Battery. Come on, lets face it. It's the REAL reason we bought a PSP for. No one buys games anymore for the damn handheld. Surprisingly we got the Nintendo Wii too. Good job. >:)
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Kid #1:Hey how the hell do you play so many games off one Disc?!
Kid #2: It's called CFW, noob. Should learn to hack your PSP.