In an earlier post, we explained how ESXi is just as fully-featured as classic ESX, and what it can do just depends upon what features are licensed in a given deployment. Some people are surprised that this much functionality can be provided in such a small package. Our colleague Eric Gray has posted a two-part series on his vCritical blog that goes into great detail about this. The first part dissects an ESXi image and shows how, even though an ESXi deployment requires about 1 GB of disk or flash memory space, the actual ESXi image is only around 70 MB (the rest being used for other purposes). The second part shows how to get a full-blown ESXi system up and running on a mere 64MB USB stick.
Of course, we don't recommend squeezing ESXi into a smaller space than what we preconfigure, since that extra content (such as vSphere Client and VMware Tools) is all useful stuff. But if you want to satisfy your curiosity, then check out those blog posts.