What is sd.rd?
bsd.rd is a “RAM Disk” kernel. This file can be very useful; many developers are careful to keep it on the root of their system at all times. Calling it a “RAM Disk kernel” describes the root filesystem of the kernel — rather than being a physical drive, the utilities available after the boot of bsd.rd are stored in the kernel, and are run from a RAM-based filesystem. bsd.rd also includes a healthy set of utilities to allow you to do system maintenance and installation. On some platforms, bsd.rd is actually the preferred installation technique — you place this kernel on an existing filesystem, boot it, and run the install from it. On most platforms, if you have a running older version of OpenBSD, you can FTP a new version of bsd.rd, reboot from it, and install a new version of OpenBSD without using any removable media at all. Here is an example of booting bsd.
