System Restore is a Windows System tool that backups your computer or basically takes a snapshot of it, to restore to it at a later date. So for example if you set a restore point when you first get your computer, if you look at it, thats exactly what you get if you restore back to that spot.
Even though system restore leaves the files you created intact, it will not leave programs on your comuter that you did not have when the snap shot was taken. So if you have photos and files they will still be on your computer when you restore it to an earlier date, however any programs you installed after the snap shot will have to be re-installed to use. Just remmber that system restore will not recover a file that you have deleted so if you are restoring, hoping that your accidentally deleted file will come back...it won't.
I use System restore at least a few times a week. Just before I am going to install something, including Windows updates, I set a restore point. This is just incase something out of the blue ruins my smoothly running computer. Trust me, it has come in very handy.
Sometimes you don't even have to do anything and your computer can still go haywire. As we all know they have a mind of thier own.
Watch this video to see how to get to system restore and how to use it.
Also you can see more information at How and why you should use system restore in Windows XP