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It stands for "Living Standards Document": https://www.gnunet.org/en/livingstandards.html

I can't find much on what "LSD" means here. The root of the subdomain has no index, just a file listing.

>What would be the reason for using "lsd" instead of popular IETF RFCs?

Maybe due to the following?

>This specification was developed outside the IETF and does not have IETF consensus.

Most RFCs start without consensus as well, that's why they are Request For Comments, to reconcile about the idea/specification

This sentence is usually added for specifications which are submitted independently to the Independent Stream Editor, as opposed to drafts which are discussed in a WG at IETF.