This goes through a little project I been working on that fits a trimmed down CentOS 5 distro entirely into RAM. You can initially boot it off of PXE, Grub, or a CDROM.
Once in RAM you can manipulate the local disk. The version I have has NTFS support with chntpw so you can boot up a Windows 7 box and change local passwords.
You can also share the contents of a disk out via Samba, FTP, or HTTP.
Another cool thing is you can share it out as an iscsi target for use as block datastores for vmware.
NFS mount larger items so you can run a GUI and make yourself a thin client.
Finally, the orignal purpose was for use in high performance clusters. Have all your nodes PXE boot your image, and you will not need to local hard disks.