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In Apple's Mac Management Basics 10.10 they say that NetInstall and NetRestore images rely on NetBoot to "boot an operating environment that frees the internal drive for an operating system image or upgrade."

Is the operating environment stored in the NetRestore/NetInstall image or is it part of the macOS Server application?

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The OS is stored in the image which is transferred across the network. NetBoot can boot any operating system in this way, depending on the contents of the image.

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