A. Versions of ESX prior to 4.0 were only capable of creating thick-provisioned disks. Disks in this format are created with the entire size of the disk pre-allocated on physical storage at the time the disk is created. This pre-allocation means that creating a 100GB virtual disk actually consumes 100GB of physical disk space on your drives.
Allocating physical space to virtual disks can be a resource intensive operation. The internal process that carves out disk space on your physical disk drives could have an impact on the performance of other virtual machines (VMs). Thus, pre-allocation provided a way to ensure that this resource-intensive operation occurred all at once, only when new disks were provisioned.
Compare this behavior to thin-provisioned disks. With a thin-provisioned disk, the amount of physical disk storage used by a virtual disk is equal to the amount of actual data on that disk. If you create a 100GB disk but only use 20GB of that disk, the actual disk consumption on your physical drives will be 20GB.
There are two downsides to thin provisioning. First, each expansion of the requires a small amount of extra resources to accomplish. This activity can have a slight impact on disk performance, particularly when many VMs share the same Datastore. Second, administrators must pay careful attention to disk consumption. Because every disk "believes" that it has more space available than it actually has, the situation becomes possible where a well-meaning VM consumes all your physical storage. The result of filling up your disks in this manner can be painful at best.
Today’s improvements to disks, SANs, and disk provisioning have reduced the performance impact of thin provisioning. Thus, using thin-provisioned disks can dramatically reduce your wasted disk space. However, you must be exceptionally careful to never fill that disk space to capacity. Monitoring disk space usage and having extra disks on hand in an emergency are vitally important.