Living soil refers to soil that has a community of organisms within the soil that work together to break down organic matter. That activity provides nutrition that is extremely important to plants and other surrounding organisms. Essentially, living soil is an entire ecosystem of sorts.
A community refers to only the biotic factors in an environment, but an ecosystem takes into account the abiotic factors as well. The abiotic factors that are present within living soil would be things like the composition and texture of the soil itself, the water amounts within the soil, and even the temperature of the soil. The biotic organisms present within the soil should be diverse in kingdom classification as well as individual species diversity. Bacteria is absolutely critical within the soil as are various protists, fungi, and animals like earthworms. Generally, the bacteria and fungi are involved with the decomposition of organic materials. Protists can do this too.
What is truly fascinating is that entire energy pyramids are present within healthy living soil. Some organisms use fresh organic materials as their food source. These are primary consumers. Next, the secondary consumers either feed upon the primary consumers or on the waste products of the primary consumers. Tertiary consumers exist as well. These kinds of biologically diverse soil systems are essential to maintaining a beneficial environment for plant roots.