UnionFS is, by definition, a Unix-based file system that is being used to map different file system structures over each other, but having the physical files only once. In case of the iOS this would be used to avoid moving all existing apps to a new folder and mapping them back with a symlink. Instead a new file system structure would be mapped. The first use of this in a jailbreak was in JailbreakMe's third incarnation, Saffron.
The current development status and future use is unknown.
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