I've had mixed experiences with these "restore" disks. I find that 50% of the time you'll be prompted to "insert Win CD now" or similar. It seems there are two types, one is an image which contains the OS plus other stuff, and copies straight onto your HDD. The other is a setup disk which then requests the original OS CD, which you may or may not have.
Some restore disks have a menu option, such as 1) Reinstall OS without other changes, and 2) Format hard drive and reinstall OS. The former does not touch your data files, the latter wipes everything out.
When I acquire secondhand PCs or trade-ins I always try to get the full package of original disks, but often people have lost them, supply the wrong ones, or have probably never had them in the first place.
If you view the restore disk with Explorer, you'll be able to see what's on it. There may even be a "readme" file.