Really that shouldn't be called firmware (the actual firmware would be the fixed code that receives second-stage code from the host), but "software" doesn't fit that either. Maybe "controllerware" or something like that.
What I always understood firmware to be is: a ROM that gives a CPU something to do when power is applied, as RAM is blank on power on and things like storage devices can't just put stuff in RAM without being directed by the CPU (which doesn't have code to do that at power on unless provided by a ROM).
Depending on the scope of the device (from multipurpose PC down to single-purpose things like microwaves, gas pumps, hard drives, LCD controllers) the firmware may just allow an operating system to be loaded or actually be all the code the appliance needs for its CPU.
If the CPU is embedded in a peripheral, then:
- it has to have some small ROM that does nothing but wait for an image to come in from a bus (USB, etc.) and then execute. The sound chip in Nintendo's Super NES is an example, on power on/reset it has a 64 byte boot ROM that does nothing but wait for data to come in from the main 65816 CPU and then runs that code when received.
- the host has to have some way of externally programming the peripheral's RAM directly and resetting the peripheral's CPU but not the peripheral's RAM. I suppose JTAG could be used for this.
My opinion: CPU microcode isn't firmware - CPU microcode sets the configuration of internal connections/parameters in the CPU. It's kind of like a settings file. But: I think recent microcodes do actually include code (see Xucode) but that code is meant to be the behavior of advanced instructions and not designed to be something that tells the CPU what to do from the moment it's powered on.
There are plenty of things that have firmware, but run it out of RAM. FPGAs do this, and some microcontrollers. Dialog, now Renasas, has microcontrollers that run their firmware out of RAM.
Commonly there is a hardware peripheral that pulls the firmware from a couple of places (could be an onboard ROM, could be jtag, or other) and loads it in to RAM.
