Sprite Backup

[bones20]

I recently started using Sprite Backup. I went through its documentation and and several sprite backup threads and that people have used it to good effect. However, there are still a few things not clear with me with regards to its functionality:

1. Does this software create an image of the phone ROM memory which can be reloaded in case you mess up the system? I mean is it just like making my own custom ROM memory image? Doesnt seem so since the archive size is much smaller than I would expect in that case. I am asking this since I have PC software acronis which actually makes an image of your harddrive which can be used to restore the entire old snapshot.

2. if not one, is it like just taking data backup? I created an archive and it has taken backup of almost the entire file system. if it is good only for date backup, why would it archive the entire file system?

3. if not 1., does its restore functionality also restore the old custom installed applications?

I did read on one of the threads that the restore works only as long as the OS is the same version.