A new local datastore is created upon install of ESXi server if boot device is local storage.
Example of local datastore created per ESXi host installation
VMware vSphere ESXi 8.x
If the ESXi boot device is Local Storage and greater than 142 GB the left over space is formatted with VMFS file system and mounted as a datastore.
The selected value must fit the purpose of your system. For example, a system with 1 TB of memory must use the minimum of 64 GB for system storage. To set the boot option at install time, for example systemMediaSize=small, refer to Enter Boot Options to Start an Installation or Upgrade Script. For more information, see Knowledge Base article Boot option to configure the size of ESXi system partitions.
The installation switch –novmfsondisk can be used to prevent creating a local data store during install.