ESD files are used internally by Windows Update / UUP for feature updates, but this is independent of file associations. In fact, Windows Update itself treats these files as regular WIMs. And no, ESDs cannot be used to install applications.
If any 3rd-party programs exist that assign actions to esd, they would also assign the same actions to wim and swm. Windows itself doesn't treat the esd extension in any special manner; in fact, you can freely rename between esd and wim, and all Microsoft utilities will treat them the same. 7-zip should also do the same and treat esd as a synonym of wim for the purpose of associations.
No default actions exist for esd at all. That's what I have been saying all along. The esd extension isn't even registered by default (not merely unassociated, but completely missing from Registry).
Nothing at all, .esd is not even a registered file extension by default.
The esd extension is unassociated by default on Windows; it's treated as an unknown file type. Manually selecting 7-zip from the app list works if I double-click an esd file in Explorer. All that is needed is a button in Settings for esd, like we have for wim and swm already.
Add *.esd to the list of supported file associations