It's quite common to see 4 gigs (short for Gigabytes) USB drives these days and a standard DVD is about 4.7 Gigs in size. So it was but a matter of time before someone came up with a way to trim some fat off the installer and fit that on to the USB disk.
Oh and if you came looking for info on Linux and USB devices, try here.
Update: Mitesh points us to Fedora's Live USB creator that does away with the need to format or partition your USB drive. Wouldn't it be nice if this could be adapter for the other makes of Linux too!
Image credits: sevenheaven.nl