Your network contains an Active Directory domain named contoso.com.
The domain contains a Hyper-V host named Server1.
Server1 has an offline virtual machine named VM1 that is stored on a virtual hard disk named VMl.vhd.
You plan to implement multiple virtual machines that have the same configurations as VM1.
You need to recommend a virtual hard disk solution for the planned implementation.
The solution must meet the following requirements:
– Minimize the amount of time required to create the new virtual machines.
– Minimize the amount of storage space required on Server1.
What should you include in the recommendation?

A.
Differencing VHD disks

B.
Dynamically expanding VHD disks

C.
Dynamically expanding VHDX disks

D.
Differencing VHDX disks

Explanation:
A Differencing VHD is a pretty nifty tool to use. Basically what happens is, there is a Parent VHD (VM1.vhd) in this case. All new Differencing Disks are based off of
a reference of the Parent Disk’s configuration. So each new Differencing VHD is tiny in size, because it merely references the Parent Disk in order to boot etc, and
then all changes are written to the Differencing VHD (not the Parent). This means multiple Differencing VHDs can utilize one Parent VHD, but they all take very little
storage because they only save information that is unique to them.
For example, If I install iTunes on a VM that is using a Differencing Disk, that modification will ONLY be present on the Differencing disk.
This conserves space, and because the new Differencing VHDs are so small in size, they are quick to create.
This meets both requirements.

http://lyncdup.com/2012/06/creating-hyper-v-3-differencing-disks-in-server-2012-with-gui-and-powershell/