The Sakai Installer project started as an experiment by Edia in running Sakai off a USB stick. We wanted to find a way to make it easier for people to give Sakai a try and at the same time we wanted something to hand out during the Amsterdam Sakai conference in 2007 that would make people notice us. I think I can say we succeeded in both.
The version that we're now open sourcing is an updated version of the one that we created the Sakai on a USB stick with. That USB stick contained an installer that does two things: it check for and installs a Java JRE and it starts a demo version of Sakai that is placed on the stick alongside the installer. Once started, Sakai runs entirely from the stick. The database is HSQLDB, which is stored on the stick itself. That means you can start Sakai from the stick, create users, sites, resources etc and than plug the stick into a different computer and find Sakai in the exact state that you left it in.
The source for the Sakai installer is in contrib: https://source.sakaiproject.org/contrib//sakai-installer/