It has been confirmed by developers that the entire scene is reloaded with each undo step, but I did some tests myself. I think Blender tries to keep all of the undo steps in ram but at some point the memory overflows into virtual memory. So there’s no physical location other than your page file. It’s amazing a 500 mb file takes up 32 gb of ram while working, solely based on the undo steps.
So unless you overflow your physical ram you aren’t using the harddrive, but you are still fully loading the entire scene from ram rather than the one object that has changed, much less a delta of the one object. It’s completely inefficient and needs to be fixed.