Short answer: the kernel image is on the internal MicroSD card and the rootfs is on a USB drive.
Long answer: unlike the GuruPlug, the Dreamplug doesn't have internal NAND. However, it has an internal (built-in) 2 GB MicroSD card for the kernel image and the rootfs. Of course you can put your Arch Linux ARM rootfs on it if that's what you want.
By default, the internal card card has two partitions:
- a FAT16 partition containing the kernel image (sda1),
- an EXT3 partition containing the Ubuntu rootfs (sda2).
Uboot resides on a 2MB NOR flash.
So if you want to put Arch Linux ARM on the internal MicroSD card, once you have a working kernel, just replace the original Ubuntu rootfs on sda2 with the Arch Linux ARM one and configure Uboot to tell the kernel to use /dev/sda2 as root:
$this->bbcode_second_pass_code('', 'setenv x_bootargs_root root=/dev/sda2 rootdelay=10')