Plasma is a feature added in the Metal Gear Solid Pack to LittleBigPlanet 1. Like spikes and electricity, this hazardous device will kill you on contact. It looks a lot like electricity, except there is more moving white on plasma than electricity. This appears in many of the Metal Gear Solid levels in the form of the plasma turrets.
In LittleBigPlanet 2, it is a starting projectile, and the player can now change material to have the properties of plasma. You can also change its color to fit in with the style of the scene.