Features on Demand is a new feature of Windows Server 2012 that allows the user to remove the binary files required to install a Windows feature, therefore reducing the security footprint of the Windows Server 2012 installation.
To use Features on Demand, go through each Windows feature that is not enabled and run the Uninstall-WindowsFeature PowerShell command, specifying each feature you don’t want with the -Remove switch at the end of it. It’s the -Remove switch that deletes the feature’s uninstall files, enabling Features on Demand.
If, at a later date, you wish to install a feature, you can do so with the Install-WindowsFeature PowerShell command, specifying an alternate source directory for the feature installation files (with the -Source switch), or via the Specify an alternate source path link at the bottom of the feature installation window in the Server Manager. Alternatively, you can install the feature with DISM commands, specifying an installation source path.
You can also manipulate the default Features on Demand behaviour using the following Group Policy setting:
Specify settings for optional component installation and component repair
Microsoft states that 90% of Windows Updates are for features that are not currently being used and therefore removing these features increases the security of Windows Server 2012 by up to an additional 90% by reducing the the surface of attack.