Live Roleplaying or Live action role-playing began as a spin off from the table top roleplaying games from the 1970's and 1980's such as Dungeons and Dragons, Runequest and Tunnels and Trolls.
The basis of such games was that a bunch of players would design characters and play their way through a story designed by a Games Master or Dungeon Master. This was done purely in the players imaginations, and provided an interactive story based loosely in many ways with the age old tradition of oral storytelling.
The only things needed were some dice to decide outcomes and rules to govern specific game mechanics.
LRPing (Live Roleplaying) emerged from this as a hobby more connected to drama and acting than to oral storytelling. Players still design characters but the players actually undertake their actions rather than discussing them with the Gamesmaster. Where combat exists in an LRP system it is conducted for real (usually with safe padded weapons) rather than by the outcome of a dice roll.
Rules are still necessary for some aspects of the hobby, and a gamesmaster is usually required to moderate certain player actions. Often some players will choose to work with the gamesmaster and help with the storyline "often in the form of monster roles" , but these are usually undertaken by more experienced players who are fully familiar with the rules.