As any recent Windows admin is sure to have noticed, the disk space requirements continue to grow for modern OS’s (meaning Vista/Server 2008 and beyond, not to be confused with Windows 8 “Modern OS”). A big reason for this is the new WinSxS (C:\Windows\WinSxS) feature that make administrative tasks such as installing roles/features, rolling back updates, etc. much easier.
The good news is that the days of carrying a sleeve of media DVD’s or maintaining a share of extracted iso’s whenever you need to make an OS level change is gone..hurray! The tradeoff however is the requirement to store the binaries locally.
Here’s a great blog post on TechNet that goes into detail about WinSxS and options for reducing the local disk requirements for Server 2012: