Final Fantasy VII
The Lifestream is a substance that flows below that planet's surface and it is referred to frequently throughout the Final Fantasy VII mythology. When it is actually seen by players, it has a green tint and appears as a fluid stream.
There are numerous instances where Mako shoots up from the ground, much like a Geyser would, and these have become wonders for local residents that witness the natural phenomena.
The Lifeblood of the Planet
The Lifestream is the essense of the planet and without it, the planet would become a barren wasteland. The Lifestream helps to create new life and when things die, they are returned to the Lifestream. In essense it is similar to matter - the amount always stays the same.
Through the Lifestream, the planet is also consciously aware of its situation. It created WEAPONS to try and protect it, if required, with the ultimate WEAPON being Omega Weapon. Whereas other WEAPONs are responsible for defeated threats, Omega's job is to absorb the Lifestream and search for a new planet in the universe, so that the cycle can start again.
Knowing about the ways of the Lifestream, even after she had been killed by Sephiroth, Aerith Gainsborough is still able to put her plans into action. The Materia she was using (Holy) has the ability to use the Lifestream's energy to defend the planet in times of great danger, and she hoped it would be enough to stop Meteor.
This wasn't the case though, as Holy was not powerful enough. Aerith therefore had to forcefully manipulate the Lifestream in order to aid Holy. Her intervention saved the planet, as the combined forces of the Lifestream and Holy were able to destroy Meteor.
Final Fantasy VII: Advent Children
Due to the nature of the Lifestream, even foreign entities can be absorbed into it when they die, which is what happened with both Jenova and Sephiroth. From here, they plotted a new way in which they could take over the planet, which is where they hatched the plan for Geostigma.
When Aerith used the Lifestream to destroy Meteor, it was sprayed all around Gaia, but primarily around Midgar. Inside all of the little droplets was the Geostigma virus and it infected many of the children that it landed on due to their weak immune systems.
Using Lifestream To Control The Planet
With parts of Jenova inside all those infected by the Geostigma virus, when they died they would go into the Lifestream as part of Jenova. This meant that over time, Jenova would obtain a large portion of the Lifestream as part of its own entity and using this, it would be able to take control of the Lifesteam and use it for its own desires.
However, with the defeat of the Silver Haired Men and Sephiroth, Aerith was able to cure a large amount of those who suffered from Geostigma and thus, Jenova's plan to manipulate the Lifesteam was nullified.
Dirge of Cerberus: Final Fantasy VII
Lucrecia Crescent's research suggested that Omega Weapon could be summoned as a last resort for the Lifestream, allowing it to evacuate the planet. After learning of this, Professor Hojo, while using Weiss as a vessel, hatches a plan to summon Omega on false pretences and then take it over.
His plan is to sacrifice pure souls to the Lifesteam in large quantities, which will make the Lifestream believe that a catastrophe is happening. This plan ultimately works and Omega is summoned, but Vincent Valentine is able to defeat Omega and the Lifestream returns to its normal existance.
Crisis Core: Final Fantasy VII
The Lifestream in Crisis Core makes a few brief, but notable appearances throughout the story. The first two major incidents being the defeat of Sephiroth in the Nibelheim Mako Reactor and the defeat of Genesis Rhapsodos where they both fall into the Lifestream. While Genesis returns at a later stage, this is the last appearance of Sephiroth in Crisis Core.
Towards the end, Minerva appears and grants Genesis his wish to become a true SOLDIER once again as the Lifestream decides that it is not Genesis' time to die. Minerva (through the Lifestream) also cures Genesis' degradation.