There used to be a time when Line Interactive referred to a unit with a sine wave inverter, or to a particular way of activating the inverter, but the international standard EN62040 has defined Line Interactive UPS Systems as where the output Voltage is (potentially) Independent from the input voltage but the frequency is the same, and given the classification VI.
In normal operation, the AC power is passed straight through to the load via a transformer. The transformer allows the UPS to boost the input power if it is too low, or buck the input power if it too high. This gives the line interactive UPS a greater operating voltage over offline UPSs, and extends battery life. Some of the AC power is taken and passed through to a Rectifier / Charger which converts AC to DC and uses this to keep a float charge on the battery.
Should the mains fail – or go out of tolerance – i.e. becomes either too high for the buck circuit or too low for the boost circuit, the UPS switches to battery operation, with the transition taking no more than 10 thousands of a second. DC power is then delivered to a circuit called an inverter, which converts the DC into an AC power signal, which will provide power to the load.
Note the output waveform may no longer be sinusiodal. Lower cost systems with a non-sinewave inverter (or a harmonic distortion of more than 8%) are classified as VIX. Those with a sine-wave inverter are classified as VIS. Although the transformer makes the line interactive UPS less efficient than offline UPSs, the efficiency is still high and a lot better than online double conversion. As a result a VIS Line Interactive UPS System is a good mid-range product which also has the benefit of being generally quiet in normal operation. A VIX Line Interactive UPS System is an improvement over offline UPS at little increased cost.