Before installing ESXi, you need to decide where to store the ESXi files. A local disk, SD card, SAN (LUN), FC, or USB device are all possible destinations you can use for ESXi, but what solution is the best and what you should use is very hard to say. The choice to make depends on your infrastructure design and network configuration, and the installed devices in your target machine.
You can use a remote device available through your SAN (for hardware-based HBAs such as fiber channel, fiber channel over Ethernet, or iSCSI) but you can use this method with software-based initiators for iSCSI and FCoE. An extra configuration is required to set up LUNs and zoning . Anyhow, the use of SAN LUN creates a dependency on an external storage array that, in the case of failure, makes the ESXi unusable, but your storage array and SAN need to be highly available anyway.
From my perspective, using a SAN device for booting is always preferable if your hardware infrastructure allows it since you do not need additional local disks installed in your server.
Using local disks as the destination for the ESXi files is a solution that, until a few years ago, was popular in most ESXi installations because it is a cost-effective solution and doesn't require any extra configuration. If the local hard disk is your choice, I strongly recommend configuring RAID 1 to provide fault tolerance. There is no need to invest in SSDs as booting devices, because there is no benefit from using them at all. The smallest available disk from your vendor will do the job.
A valid alternative to HDDs is the use of SD cards which offer better performance and, compared to years ago, are more significant and more cost-effective. To use SD cards, the target server needs to be equipped with Secure Digital (SD) bays, but if your server has only one bay available, it won't be able to provide fault tolerance. Luckily, certain hardware manufacturers, such as Dell and HP, provide servers equipped with double bays for SD cards you can mirror, like you would an HDD, and fit perfectly in this installation method.
The downside of using SD cards is the requirement of some additional configuration. The scratch partition of ESXi needs to be placed in persistent storage (VMFS or NFS volumes attached to the server) to store vm-support output, which you need when you create a support bundle.
The USB stick is another possible option you can use for ESXi installation. It is the most economical destination device, but for production servers, I don't recommend its use since you don't have any redundancy in case of failure.
As with SD cards, for USB sticks, no log files will be stored locally (a scratch partition needs to be configured). Although a 1 GB USB or SD device suffices for a minimal installation, it is recommended you use a 4 GB or larger device.
Did you notice that fault tolerance is a recurrent caveat for devices? Is there any reason for that? Yes, of course. Let's talk briefly about the importance of having fault-tolerant components. What happens if you use just one device for your ESXi installation and suddenly the device fails? The ESXi stops working, stops providing its resources, and in a situation of inadequate infrastructure design, the network services may be no longer available to users. For this reason, a good design for ESXi should consider the use of two devices configured in mirror RAID 1 to provide fault tolerance and performance.