LiveID reuqired data is a webpart which allows you to join LiveID with existing user account. If the page where this webpart sits is set in settings (Required user data page), user who signs in by LiveID is redirected to this page.
If he already has some account he can use existing user part and login with his current credentials. His LiveID will be joined with the account. Otherwise he can use the other part to create new user. LiveID sign in must occur, otherwise webpart does not have needed data and does nothing - normally would not be visible.