I'm building a linux boot floppy from scratch. I understand how to compile the kernel and uclib and such, but how does the actual boot work. Does my floppy need lilo? How else would it boot? How do you install lilo to a floppy (dd?). Thanks in advance.

I am not going to take the time to try to give you complete instructions, but maybe I can point you in the right direction(s).

Once common way people use to boot from floppy is using syslinux. You can find out info about it by googling on the term. It also might be helpful to look at how other people have used syslinux. Damn Small Linux (DSL) uses syslinux to provide a single floppy containing both the kernel and initrd that boots to their CD. DSL's bigger brother, DSL-N uses two floppies for this purpose; the first contains the kernel and the second contains initrd. Both would be excellent examples to study. (You can download images of these floppies from the same sites that have the CD images.) There are, of course, other examples you could find.

I am also pretty sure you could use GRUB for this purpose and you might be able to use LILO, but I am unaware of any examples of either. Search the web for instructions if you want to go either of these routes.