Look at the installation iso, it load a compressed image to RAM and execute sysintall from here.
Edit:
The compressed image is /boot/mfsroot.gz (it's loaded from /boot/loader.conf), you can uncompress it and mount it to see what's inside.
Sysinstall is started because init is missing (see /boot/default/loader.conf: init_path="/sbin/init:/sbin/oinit:/sbin/init.bak:/rescue/init:/stand/sysinstall"), but if you put a normal base system as a compressed image in mfsboot.gz, i think it'll boot normally.