Android 4.2 brought a nifty, albeit it somewhat useless, new feature called Daydreams. In a nutshell, Daydreams is just a screensaver, which might be useful in some situations - specifically on tablets. For the current time, though, there are only a few different stock options for Daydreams: clock, colors, Currents, Photo Frame, and Photo table. There are also a few apps out there that have incorporated the feature - like Beautiful Widgets, for example - further increasing Daydreams' usefulness.
Live Wallpaper Daydream, however, is a little different. It's simple in nature: it lets you use the currently-applied LWP as a daydream.