VMware Certified Professional - Data Center Virtualization (VCP-DCV) Practice Exam

The appropriate action to create a virtual machine with smaller virtual disks than the original physical server involves the use of hot cloning with volume-based cloning at the file level. This choice allows the administrator to convert the physical machine into a virtual machine without shutting it down, thus minimizing downtime and making the process more efficient.

When utilizing hot cloning, the process captures the live data from the physical machine, ensuring that the most up-to-date information is transferred. By employing volume-based cloning at the file level, the conversion process allows for the selection of individual files or folders, enabling the administrator to exclude unnecessary data, such as temporary files or archives, which contribute to a smaller virtual disk size.

In contrast, cold cloning typically involves shutting down the physical server, which is not ideal for environments requiring continuous availability. Additionally, methods using block-level cloning capture the entirety of the data at the block level without the flexibility to target specific files, leading to potentially larger virtual disks than desired if all data is included.

Thus, the combination of hot cloning and file-based volume cloning not only facilitates reduced disk sizes through selective data inclusion but also ensures minimal disruption to services.