Just found this video and it does a great job running through the setup:

For the past few months we have been running multiple labs, two physical blades each, to do development against the vCloud 5.1 Beta. With the capacity that we have available in our overall lab, a nested approach like the VMworld labs would be a nice fit for our development team. Ideally we could spin up full vCloud instances in minutes. My experience thus far with nested environments was running vSphere in workstation to study for my VCP exam.

Overview….. Infrastructure Setup You will need three servers besides your basic vSphere setup: TFTP, DHCP and the Auto Deploy server. You will also have to make sure you have PowerCLI Setup. TFTP Server Setup Red Hat/CentOS TFTP Server Setup Download the Deploy-tftp.zip file from vCenter and put it in the TFTP root directory: The file can be found in the web GUI: I put the file in: DHCP Server Setup Just like with TFTP, you can use pretty much anything for DHCP.