Neowin reports Microsoft created WIMBoot (Windows Image Boot), a new feature for tablets and other devices with very low storage capacities. It works by keeping all installation files compressed during the installation instead of extracting them from an image file, allowing you to install the latest version of Windows on systems with a storage capacity as small as 16GB.
Effectively, you copy the WIM file into a separate “images” partition (just like you would for a recovery image), then use DISM to create pointer files from the standard C: operating system volume into the WIM file. These pointer files are completely transparent, and Windows knows how to boot the operating system (keeping all the files in the WIM) when configured in this setup.
The end result is that a device with 16 GB of storage will be able to keep 12 GB free under Windows 8.1 with a WIMBoot set-up, compared to just 7 GB of free space in the normal method.