ITNinja

When a PXE enabled client boots, it obtains an IP address from a DHCP server, it then discovers the Proxy DHCP server that provides the client with a list of Boot Servers. The client obtains the name of the network bootstrap program (NBP) from the appropriate Boot Server. Finally, the client uses TFTP to download the NBP from the Boot Server and then executes it. This should be especially valuable to imaging software which will allow functions normally performed by a boot disk to be sent via the network.
Visitor, Julian Topley offers this link as a good source for understanding PXE.