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What happens when a restore point is created using System Restore?

I agree with you that Windows XP Restore is a great lifesaver, but what exactly happens when a restore point is created? How much disk space is used and where is the disk space allocated?
Here is a very simple overview of System Restore: When you create a new restore point, it's pretty well empty, except for a snapshot of the registry's hive files. As you delete and change protected files, backup copies of those files are copied to the restore point's folder. When you restore the snapshot, System Restore is then able to restore the original registry hive files, backup copies of protected files and so on. System Restore is one of the more remarkable utilities in Windows XP. And it uses very little disk space in comparison to the value. The fewer major changes you make to the computer, the smaller the restore point's size is going to be.

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