Format the USB stick. For example
sudo mkfs.ext4 -F /dev/sdb
Mount it
sudo mount /dev/sdb /mnt
Unpack the roots
cd /mnt
sudo tar xfJ ~/archxo-1.tar.xz
Unmount the stick
sudo umount /dev/sdb
Finally plug in the stick and start the XO.
This will include only the packages which are essential to boot, configure wifi and install packages.
pacstrap -d /rootfs systemd systemd-sysvcompat pacman netctl \
wpa_supplicant dialog linux-firmware grep dhcpcd