Can u pls describe in detail what backup utility software actually does?

now i know that it is used to backup our data...i've used one software called SOSonlinebackup which is used to store data online and is used to backup.....now i selected 65gb of data and it started to back up the data...now as it process size of the file started to increase and ultimately it returned 60gb.....so as itz a large file how can we store it on cds or dvds..some one is talking about using cds and dvds.....it can be on stored on some external harddrive..............SO BASICALLY WHAT IS THE USE OF DOIN ALL THAT........imean we can individually store data on cds and dvds using burners.............

2)i heard of the software called true image....now i heard that it actually makes an image of whole sys including OS..and with less size than original.......letz say this my hdd is 80gb and i used true image to make an image of hdd...so it resulted in a file of size less than that of original like 4gb or 5gb or something

....is it possible to do like that coz itz benificial as it is easily storable on dvd's and other media so when hard disk crashes u can use that dvd and click on thje image to retrieve that data

so itz possible........is there any software(freeware) which can do that.