vSphere 5.1 added the new feature in Auto Deploy :

Stateless Caching \ Stateful  Install feature .

In this method we can enable the option to save the ESXi Image to an assigned dedicated boot disk and it can be a local disk,a lun or USB .

Stateless Caching:: Apply the host profile to cache the image on a local disk or USB and the boot disk will act as a backup boot device that can be used when PXE boot failure or issue in network layer.

Stateful Installs:: Apply the host profile to cache the image on a local disk or USB and the subsequent boots will be from the boot disk and it no longer uses Auto Deploy.

The caching of the image will take place after it running in local RAM , the image is copied to local storage device.Configuration have to be defined within the host profiles settings . Like mentioned in the below pic the arguments for first disk to be mentioned and we can use comma-separated list of disks to use , esx for the first disk with ESX installed on it , model or vendor information or specify the name of the vmkernal device driver. In most environment local will work which points to the local disk and in case if its not accepting the local disk or model then use the esxcfg-scsidevs -a  or esxcli storage core adapter list command to find the kernel device driver .

Arguments for first disk :

Reference : https://pubs.vmware.com/vsphere-51/index.jsp#com.vmware.vsphere.install.doc/GUID-1901B238-EDA5-440A-B352-8EE48EB0AB48.html