Wang Kiu in Holland used the term "Live Dummy" to refer to the two people version of the dummy that he said Yip Man taught him in a restaurant. In this version, one side throws punches and the other side goes through the dummy movements.
A good live dummy by the other definition feels like playing a good instrument. The recoil is just right and the sound is just right. The dummy is not too loose and not too firm. Hitting a tree with arms sticking out of it, just doesn't give the same good feeling. If you do a double palm hit to someone's stomach which causes him to bend forward to expose the head, the the timing and feeling of that and doing that on a good dummy is similar.
With a good dummy it's a joy to train on it but with a bad one you wll tend not to use it too much.
Ray
Victoria, British Columbia, Wing Chun