The Windows Deployment Services server role in Windows Server 2008 is the updated and redesigned version of Remote Installation Services (RIS). Windows Deployment Services enables you to deploy Windows operating systems, particularly Windows Vista and Windows Server 2008. Deployment of Windows XP and Windows Server 2003 are also still possible, but only through the use of the Windows Imaging (.wim) format, since there is no more WDS-mixed mode.
The components of Windows Deployment Services can be organized into the following three categories:
- WDS Server components
These components include a Pre-Boot Execution Environment (PXE) server and Trivial File Transfer Protocol (TFTP) server for network booting a client to load and install an operating system. Also included is a shared folder (reminst) and image repository that contains boot images (from within boot.wim), install images (from within install.wim) and files that you need specifically for network boot (pxeboot.com, pxeboot.n12).
There is also a networking layer, a multicast component (Transport Server) and a diagnostics component.
More about that later below...
- WDS Client components
These components include a graphical user interface that runs within the Windows Pre-Installation Environment (Windows PE). When a user selects an operating system image, the client components communicate with the server components to install an available image.
- WDS Management components
These components are a set of tools that you use to manage the server, operating system images, and client computer accounts, such as WDSutil.exe.
Although WDS was already available as an OOB release (included in Windows AIK 1.0 and Windows Server 2003 SP2), some new features are introduced exclusively with Windows Server 2008:
- Multicast deployment
- Enhanced TFTP download performance
- Extensible Firmware Interface (EFI) network boot support for x64 systems
Multicast "carousel"
Microsoft is delivering a new multicast engine that takes advantage of the file-based Windows Imaging Format (WIM) infrastructure to allow for some very unique capabilities.
The multicast broadcast is a "round robin" broadcast of file streams that will continue to broadcast until every client computer's needs have been met. Because of this, it doesn't matter when clients come online, they can join at any time in the transfer. They listen to the WDS server and when the server has completed the image file broadcast, it starts over from the beginning. If a client misses a file, it just listens until the file comes around again (I like to call it multicast carousel).
The protocol is completely new and features congestion control and flow control - meaning that it works well on production networks without interfering with existing network communication.
The key advantage of multicast is of course allowing multiple computers to receive a communication simultaneously. The sender (the WDS server) sends the information to be communicated only once. Each client must then listen to the entire communication from begin to end to receive it. Since all clients are specifically listening to one network address simultaneously, the benefit is twofold: enhanced deployment speed since the network is less congested with multiple clients performing the same task; and decreased network saturation since every client is listening to the single stream.
The WDS management tools allow administrators to monitor real-time transmission progress to clients (including removing clients from a transmission). The management tools also offer full logging and reporting.
Setting up a Multicast WDS Server in 5 steps
Step 1. Adding the WDS Server Role
During your Windows Deployment Services installation (through Server Manager), you can choose to install Transport Server or Deployment Server (which includes the core parts of Transport Server).
To install the Transport Server, there are no specific requirements.
To install the Deployment Server, your environment must still meet the following 4 requirements: Active Directory, DHCP, DNS, NTFS filesystem
Step 2. Adding Boot image(s)
Boot images are the images that you boot a client computer into before installing the operating system image. The boot image presents a boot menu that contains the images that users can install onto their computers. These images contain Windows PE 2.0 and the Windows Deployment Services client application.
You can use the default boot image (boot.wim) that is included in the Windows Server 2008 installation media in the \Sources folder.
NOTE: You should use only the boot.wim file from the Windows Server 2008 DVD. If you use the boot.wim file from the Windows Vista DVD, you will not be able to use the full functionality of Windows Deployment Services (for example, multicasting)
In addition, there are two types of images that you can create from boot images: capture images and discover images.
Capture images are modified boot images that launch the Windows Deployment Services Capture utility instead of the Windows Setup. When you boot a reference computer (that must be prepared with Sysprep!!) into a "capture image", a wizard allows to create an "install image" of the reference computer and saves it as a .wim file. After you create the customized "install image", you can upload the image to the WDS server for PXE boot deployment. 
WDS Client Capture Wizard
TIP: Replace pxeboot.com by pxeboot.n12 to avoid pressing an extra F12 at PXE-boot time.
Step 3. Adding Install(ation) image(s)
You can build custom install images from reference computers and deploy them to client computers. A reference computer can be a computer with a standard Windows installation or a Windows installation that has been configured for a specific environment.
You can use the default install image (install.wim) -containing several SKUs of Windows Server 2008 - that is included in the Windows Server 2008 installation media in the \Sources folder. Identical for Windows Vista SKUs.
I added some "Image Groups" (Windows XP, Windows Server 2003, Windows Vista, Windows Server 2008) to create a logical hierarchy with all images you load into you WDS infrastructure.
Step 4. Build Unattend files
Windows Deployment Services allows you to automate the Windows Deployment Services client and the latter stages of Windows Setup. This two-stage approach is accomplished by using two unattend files:
- WDS client unattend file. This file uses the Unattend.xml format and is stored on the Windows Deployment Services server in the \WDSClientUnattend folder. It is used to automate the Windows Deployment Services client user interface screens (such as entering credentials, choosing an install image, and configuring the disk). Using the Windows System Image Manager (part of the Windows AIK), you can find all these settings under the OS component x86_Microsoft-Windows-Setup_version.build - Windows Deployment Services node.
- Install image unattend file. This file uses the Unattend.xml (Vista and later) or Sysprep.inf (pre-Vista) format, depending upon the version of the operating system in the image. It is stored in a subfolder (either $OEM$ structure or \Unattend) in the per-image folder. It is used to automate the remaining phases of setup (for example, offline servicing, Sysprep specialize and mini-setup).
To automate the installation, create the appropriate unattend file depending on whether you are configuring the Windows Deployment Services client or Windows Setup. We recommend that you use Windows System Image Manager (part of the Windows AIK) to author the unattend files.
Step 5. Create a Multicast transmission
Multicast transmissions allow to deploy an image to a large number of client computers without overburdening the network. This feature is disabled by default. When you create a transmission, you have two options for the multicast type:
- Auto-Cast. This option indicates that as soon as an applicable client requests an install image, a multicast transmission of the selected image begins. Then as other clients request the same image, they are joined to the transmission that is already started.
- Scheduled-Cast. This option sets the start criteria for the transmission based on the number of clients that are requesting an image and/or a specific day and time.
Additional reading:
Windows Deployment Services role
Windows Deployment Services & Multicasting
Windows Server Deployment Solution Accelerator (WSD SA)
Assign a shorter DHCP lease time for PXEclient/BOOTP clients
Technet Magazine May 2007