These are the requirements for the installation procedure. A machine with 16MB of memory and no free disk space at all will work as a terminal but won't run the installer so you need a file server and auth server first.
If you wish to install from local media, you need a FAT file system or a CD-ROM drive (and a CD writer or some other way to get the distribution archive on a CD). If you wish to install over the internet, you need a supported Ethernet card or a PPP dial-up account using a modem (not a Winmodem).