It seems like Windows Backup is more comprehensive than File History, in that it covers both files (libraries) as well as entire drives.

As I explore setting up Windows Backup I come across the selection of options. Let's see if I have understood this correctly:

The boxes for Data Files are ticked even though a system image of every drive is also ticked, so essentially the Data files are backed up twice.

The advantage of ticking both is that when I only want to restore a single Data file, if the file still exists I can use the Previous versions option to return it to the state it was when last backed up. And if the file no longer exists I can still get it back by using the Restore option in Backup and Restore.

On the other hand, if I want to restore an entire drive instead of a single Data file, I can use the system image to do so.

Now some questions:

1) The differences between differential backup and incremental backup are fairly clear for Data files. But how do they work for system images? Does the former mean a new image gets created every time while the old ones are preserved, while the latter means a new image is created and older ones deleted?

2) I presume backing up Data Files does not backup the registry or %AppData%, while system image does? What about Restore Points, do they backup registry and %AppData%?

Restore points can be useful. But they are stored on the same partition, so no use if the disk dies.

System image should be stored on a separate disk. When you create the next image, the older blocks are moved into shadow storage, which you cant see in explorer, they are available through the restore gui. The vhdx image that is visible is the most recent.

SIW2 said:

Restore points can be useful. But they are stored on the same partition, so no use if the disk dies.

System image should be stored on a separate disk. When you create the next image, the older blocks are moved into shadow storage, which you cant see in explorer, they are available through the restore gui. The vhdx image that is visible is the most recent.

Not too familiar with the concept of shadow storage, but if for example the first system image took up 200GB of space, when the next image is made does it take up another 200GB? Or how does it work in terms of storage space consumed?

Oh and my question about registry and %AppData% from above still remains.

but if for example the first system image took up 200GB of space, when the next image is made does it take up another 200GB?

No. Only changed blocks are added to the image. The older blocks that they replace are moved into shadow storage. Therefore you can restore the most recent image or the one before, or the one before that, etc.

It is a kind of differential imaging.

When the shadow store is full, the next image you make will push the very oldest blocks out, i.e. they will be deleted.

So how many images or "points in time" that you can restore to will depend on how much space is allocated to shadow storage.

There are a lot of advantages to windows system image.

I have never used the file backup, so I cant answer any questions on that.

If you want to have file backup in addition to system image, I recommend Karens Replicator
Karen's Replicator the Backup Utility for Windows v3.7.6 Released May 25, 2020 | Karen's Power Tools

SIW2 said:

No. Only changed blocks are added to the image. The older blocks that they replace are moved into shadow storage. Therefore you can restore the most recent image or the one before, or the one before that, etc.

It is a kind of differential imaging.

When the shadow store is full, the next image you make will push the very oldest blocks out, i.e. they will be deleted.

So how many images or "points in time" that you can restore to will depend on how much space is allocated to shadow storage.

I tried creating two system images hours apart, and while the "folder" created in the external HDD stayed the same name (using the timestamp of the first creation), indeed there are two images to choose from when I try to restore from Recovery during boot.

The problem is when creating the second image, it doesn't give me:
1) An option to create an entirely new system image. It seems it automatically creates one that is differential to the first. Which means it backsup the same drives as the first image did, and I cannot choose otherwise.
2) An option to choose how much space (on my external HDD) to allocate to shadow storage.

Is this all because I chose to create a system image directly instead of setting up Windows Backup and letting it do the system image creation?

It seems it automatically creates one that is differential to the first.

yes

Which means it backsup the same drives as the first image did, and I cannot choose otherwise.

If you use the gui it automatically selects the partitions required for windows to function. That is good idea because many users are clueless.

Slightly more advanced users can use commands and select any partitions.
example:
WBADMIN START BACKUP -backupTarget:f: -include:e:,d:

An option to choose how much space (on my external HDD) to allocate to shadow storage.

In the system properties window

It makes a lot of sense.