Windows vista uses Windows 2003 kind of versioning file system. This allows you to roll back or get previous version of a file.
This feature is known as Previous Versions based on the Volume Shadow Copy technology which was first introduced with the Windows Server product family.
So what is unique about Previous Version feature?
The Previous Version feature lets you quickly recover a file you accidentally lost or changed.
For example you are working on a large project report and accidenly you overwrite few pages or changed entire report formatting, vistaâ€™s previous version feature lets you quickly recover a file you accidentally lost or changed. This feature automatically creates point-in-time copies of files as you work, so you can quickly and easily retrieve versions of a document you may have accidentally deleted.
You can read more about Previous Version feature at Micrsoft vista blog.
However, there are some growing concerns about user privacy. I think this a nice feature for home user and it can be turn off too. Most home users or small business owners do not use dedicated file servers and snapshot applications. Therefore, this utility offers nice backup feature w/o paying for third party utility such as Norton Goback.