A lifestream is a list of all your recent (online) activities. What music did you play, what articles did you post, what photos did you upload, what wikipedia articles did you edit, etc.
Lifestream.fm is a free media and social aggregator that will keep you and your friends informed about what you’re doing online at a glance and in realtime. With Lifestream.fm you can put all your profiles and activity from your favorite web services all on one page, making it easy for your friends to see your newest bookmarks, your favorite videos, your tweets, your wikipedia edits, photos you’ve uploaded, your newest blog posts, and more.
Upload the Lifestream fm plugin to your blog, Activate it, then insert the badge code you got from http://lifestream.fm/badges under settings/lifestreamfm. Add the lifestream.fm widget to one of your sidebars under design/widgets.