A full backup is done by selecting all the files on the hard disk for backup. This is the simplest type of backup, and yields the most complete backup image, but it takes the most time and media space to do. An incremental backup is one where only the files that have changed since the last backup are selected. Incremental backups are supported by most decent backup software. The backup software looks at the archive bit to determine what files have been changed since the last backup, selects them for backup and then clears the bit for all the files it backs up. If any files are changed, the software sets the bit again so on the next incremental they are again selected, and so on. Which type of backup you do depends on what is important to you in terms of time, media cost and ease of restoration.
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