Live Trace in Adobe Illustrator allows users to convert raster images like photos into vector line art by tracing the image and removing colors and tones to create a simplified black and white outline. The user selects the raster image in Illustrator and chooses Live Trace from the menu, then adjusts settings like anti-aliasing to refine the tracing before clicking OK to generate the vector line art version of the original photo or image. Live Trace vectorizes raster images for use in Illustrator files and other vector applications.