A backup of a site is a copy of its content, that's kept on some other web server and can be restored if something happens. This option is rather useful, considering that you can't know if a script update shall not crash or if you will not eliminate something by accident - a file, a folder, a database entry, and so forth. If your website is backed up, it can be restored the way it was prior to when the issue appeared, so there won't be any damage, or at least it will be very little, depending upon the particular scenario. Keeping backups on your computer system is not very feasible, because you would need to do it at least once daily and you can still lose information in case your last backup isn't recent enough. In this light, you will have to rely on your web hosting company, so you ought to double-check their policy on the backups, due to the fact that some companies create backups once per week, that will do no good if something goes wrong with an Internet site that is being used and updated constantly, like an online store, for example.