It's all in the documentation 
Installing ESXi 5.0 requires a boot device that is a minimum of 1GB in size. When booting from a local disk or SAN/iSCSI LUN, a 5.2GB disk is required to allow for the creation of the VMFS volume and a 4GB scratch partition on the boot device. If a smaller disk or LUN is used, the installer will attempt to allocate a scratch region on a separate local disk. If a local disk cannot be found the scratch partition, /scratch, will be located on the ESXi host ramdisk, linked to /tmp/scratch. You can reconfigure /scratch to use a separate disk or LUN. For best performance and memory optimization, VMware recommends that you do not leave /scratch on the ESXi host ramdisk.
To reconfigure /scratch, see the topic "Set the Scratch Partition from the vSphere Client" in the vSphere Installation and Setup documentation.
Due to the I/O sensitivity of USB and SD devices the installer does not create a scratch partition on these devices. As such, there is no tangible benefit to using large USB/SD devices as ESXi uses only the first 1GB. When installing on USB or SD devices, the installer attempts to allocate a scratch region on an available local disk or datastore. If no local disk or datastore is found, /scratch is placed on the ramdisk. You should reconfigure /scratch to use a persistent datastore following the installation.
In Auto Deploy installations, the installer attempts to allocate a scratch region on an available local disk or datastore. If no local disk or datastore is found /scratch is placed on ramdisk. You should reconfigure /scratch to use a persistent datastore following the installation.
For environments that boot from a SAN or use Auto Deploy, it is not necessary to allocate a separate LUN for each ESXi host. You can co-locate the scratch regions for many ESXi hosts onto a single LUN. The number of hosts assigned to any single LUN should be weighed against the LUN size and the I/O behavior of the virtual machines.