NFS diskless is the more common approach I've used but this is very cool.
THe caveat was, you needed readonly root, so that meant freezing the OS, anything that needed changing was either stored in a ram disk (that you need to setup) or a per host nfs area (kinda like overlayfs, but not)
If you needed to update the root dir, you chrooted into it and did the (yum) update.