The Lifestream is composed of midichlorians. A living person's midichlorian count rises as they defeat people/monsters in battle. In turn, this alters their base statistics and also their raw talent with materia.

Materia is quick-fossiled midichlorian fluid, the core of which is liquid. The midichlorians in a person's body can be commanded to resonate with the midichlorians in the materia, thereby unlocking the talent contained in the orb. However, magical skills are derived of midichlorians far more ancient than any possessed by modern men. They are derived of the Cetrancients. This is why people need materia in the first place and cannot simply conjure elements naturally.
As is displayed by the Mainstays, materia is not necessary for people to learn and utilize unique talents such as the Meteorain, All Creation, Cosmo Memory, or any of Vincent's transformations.