This is used to make an "exact replica of a disk or partition, probably for the making of bootable CDs." He used this clone option to make an image of the OS X 10.1 .dmg file to an empty partition ...

How to create a bootable, backup Mountain Lion install disk Need to install Mountain Lion on multiple Macs? Here's how to do it.

You used to be able to create a bootable USB stick by restoring a DMG file located inside the installer app to a USB stick using Disk Utility. But the last version of OS X that worked on was 10.8.

You should now see the normally hidden BaseSystem.dmg file in the mounted volume. Open Disk Utility and restore the source BaseSystem.dmg to the destination of your USB drive.