Windows Preinstallation Environment (Windows PE) 2.0 is a minimal Win32 operating system with limited services, built on the Windows Vista kernel. It is used to prepare a computer for Windows installation, to copy disk images from a network file server, and to initiate Windows Setup.

Windows PE is not designed to be the primary operating system on a computer, but is instead used as a standalone preinstallation environment and as an integral component of other setup and recovery technologies, such as Setup for , Windows Deployment Services (Windows DS), the Systems Management Server (SMS) Operating System (OS) Deployment Feature Pack, and the Windows Recovery Environment (Windows RE).

You can find more information on on Microsoft TechNet | Windows PE Technical Reference

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