The intended use is to enable developers to very easily "Check it out" and do a Yocto Project build with minimal pain. This should allow the user to run a Yocto build and contain the required sources to do so, thereby removing network accesses as a barrier to entry. The image should also be capable of booting an X desktop which would simply contain HOB and offer a terminal or an app to deploy resulting images to media or to boot the built images in QEMU. Some notes are on https://wiki.yoctoproject.org/wiki/Build_Appliance_Design
By the way, anything more than 700M is probably too big to download in one chunk
http://git.yoctoproject.org/cgit/cgit.cgi/poky/commit/?h=denzil&id=d20a24310eb43fed9a3f3e75752c9ad45a18cbe4