It is possible to install applications onto CDs and DVDs, resulting in a disc that has an application that can be run from the disc drive on any Mac with a compatible operating system.
1. Before running the applications installer, insert a blank DVD or CD in the disc burner.
2. Run the application installer and follow the steps. When it asks you to select a destination, choose the blank CD / DVD. (If there is no step to select a destination you can not do this).
3. Finish the installation. If there is enough room on the CD / DVD you can repeat step 2 to install other applications.
4. The CD / DVD will have to be burned. Tell finder to burn the disc. From now on when you insert the disc into a Mac, you will be able to double-click the application icon on the disc and run the application.

You will also be able to copy everything from the disc and save to hard drive, giving you access to the application from hard drive. It should be noted that using applications from a CD or DVD is slow, and can be very hard on a CD / DVD drive! Disc drives donít normally have to move the laser lens to multiple points on a disc at the same time, something that occurs with application use, and this can wear out the disc drives mechanism. Donít use the disc to run the application more than necessary.
I discovered this when my older iMac only had a 10GB hard drive and I needed to save space, so I installed Photoshop CS2 on a CD. It saved me about 650MB. When the application started there was a dialogue stating that some files were missing and that the application needed to be re-installed, but that was just because it wasn't installed on the hard drive. Specifically it had to install a couple of preference-type files on the hard drive the first time it ran. It always worked to full capacity. This is also how I determined it was bad for the disc drive... The lens mechanism sometimes had to move to multiple places on the disc very quickly, and over time the drive was less and less able to do this.