though not really sure what files are being backed up.
So basically you're not doing a backup.
The old rule of thumb is to backup the stuff you can't afford to loose and don't backup the stuff you can (i.e. OS and software which you can, and should, reinstall from scratch rather than trying to restore).
Also, as I've mentioned elsewhere... System Restore / Shadow Copy / whatever you want to call it
IS NOT a backup mechanism. It cannot be relied on, has minimal real-life uses, and only works 50% of the time when you want to use it.
I wouldn't bother with snapshot backups unless you want to waste un-necessary storage space. Just establish where you keep your most prized files (docs, images, music etc.) and back them up .... everything else filling up your drive really does not matter !