I have vCenter Server 4.1 Standard installed in my datacenter and have 3 ESXi 4.1 hosts all licensed with vSphere 4.1 Enterprise Plus.
My question is how can I use the functionality of linked clones? what setups are required?
I am not using a central storage (SAN, NAS) instead all my VMs are stored in the host's datastores. I would be satisfied even if I can have linked clones configured only for VMs within the same datastore until I setup a central storage for all my VMs.
linked clones is a feature of VMware View. If you are looking at VDI, then View can help. However, linked clones for virtual servers isn't part of the vSphere Suite, as of today.
Troy is correct that Linked Clone functionality is not available by default via simple interfaces such as the vSphere Client with operations like "normal" cloning. To get this feature, you would need to leverage products like VMware View or Lab Manager, but the actual functionality of Linked Cloning has been available in the native vSphere API since the release of vSphere 4.0, this was not the case in the previous release in which it was still in the hidden APIs.
Here is a very simple vSphere SDK for Perl script in which leverages this API to allow you to create your own Linked Clones - http://download.virtuallyghetto.com/vGhettoLinkedClone.html The requirement of course is to have vCenter as any type of cloning requires the use of vCenter Server.