It installs a complete bootstrap development system first. After telling the Lunar package manager which software will be required, it builds the entire system by downloading current source code and locally compiling an optimized system tailored toward the users specific needs. This should result in a lean and optimized operating system. On the downside, compiling a whole distribution from scratch may be time-consuming and complicate the task of keeping the packages up to date.
Lunar Linux is licensed under the GPLv2.