A differential backup always starts with a full backup. Each subsequent backup will be a backup of every file that has changed since the last full backup ran.
Example. You run the first full backup on Sunday. On Monday, you create C:\file1.txt and C:\file2.txt. When you run the backup on Monday night, it will backup all files that have changed since your last full backup on Sunday. So, the differential backup on Monday will consist of file1.txt and file2.txt. Now, lets say on Tuesday you create C:\file3.txt and C:\file4.txt. When your backup runs on Tuesday night, it will backup everything that has changed since the last full backup. So, it would include file1.txt, file2.txt, file3.txt and file4.txt. So, on Saturday , if you needed to restore absolutely everything...it would more or less restore the full backup from Sunday, and then the differential backup from Friday night (as that would contain all changes since the last full backup occurred.).
An incremental backup is different in that it only backups up the files that have changed since the last backup (notice, not full backup). So, based on the above example, on Sunday night you would get your first full backup. The backup on Monday night would include file1.txt and file2.txt. The backup on Tuesday night would only get file3.txt and file4.txt. Thus, in the event you had to fully restore everything on Saturday, it would first restore the full backup from Sunday, and then the incremental from Monday, then the incremental from Tuesday, and then the incremental from Wednesday, and the incremental from Thursday and finally the incremental from Friday night.
A differential backup is nice in that it provides the fastest restore time, but also takes the longest to backup...as all changes since the last full backup are backed up each time the backup is run. This type of backup will consume the most disk space as the subsequent differential backups on Monday, Tuesday, Wednesday are going to get bigger and bigger and bigger...since they contain the cumulative changes since the last full backup. So, the backup on Tuesday contains the changes from Monday and Tuesday. And the backup on Wednesday will contain the changes from Monday, and Tuesday and Wednesday. So, with a differential backup, you often backup the same data over and over and over again.
An incremental backup is nice in that it provides the shortest backup time since it only gets changes since the last incremental backup, but it does lengthen the restore time as it has to restore the full as well as all subsequent incrementals along the way. This backup is going to consume the least amount of disk space as it's only the changes from each day getting backed up once.
For me personally, I only do full image backups with Acronis. My actual data files are only stored in a few folders and they aren't on my C drive. I regularly attach some USB 2 drives and run robocopy to mirror my actual data on the hard drive with the external drive. I try to always keep 1 external offsite at any time just in case I am robbed or the house burns down.
With Acronis, about once a month or so, I run an image based backup of my C drive to an external eSATA drive. This gives me a snapshot style backup of my OS and my installed applications. I just go ahead and do a full backup each time, as my C drive in an SSD and it takes less than 5 minutes to image it. < This image is just my OS and apps....so in the event that I had to restore the whole box, I would have to restore the image to get the OS and apps back, and restore from my USB drive to get my data files back.