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#11
System Restore backs up the registry and certain other system files. It doesn't backup Windows completely and it doesn't backup your personal files (pictures, videos, etc) at all.
It fails occasionally--in my experience it won't complete maybe 3 times per hundred. It's not a "backup" in any legitimate sense of the term. But it's very handy and quick.
"Backup" is kind of a loosely defined term, but it can mean:
1: An image file that represents certain partitions on your hard drive. Most commonly the C (Windows) partition. This is what is most often meant by the term. The image file isn't of much use until it is "restored" to a hard drive, at which point the system (Windows and anything else that may have been on the C partition) is returned to the state as of the moment the image file was made--including installed applications. An image file might contain several partitions---whichever you select. You might make an image file every month, knowing that it will never be out of date by more than a month.
An image might take 10 or 20 minutes to make and perhaps a half hour to restore.
2: A backup of personal data alone, without using an image file. This can be done with the mouse, the keyboard, or can be automated with the use of a program specifically designed for the purpose. You might do this daily.