A Hyper-V snapshot is not a backup copy of the data; it is a differencing disk that is associated with the parent virtual hard disk. When a differencing disk is created, a parent VHD becomes read-only and all writes are sent to the differencing disk.
As additional snapshots are taken, a new differencing disk is created with a relationship to the differencing disk created before it. An administrator then has the option to role the VM back to any point in time at which a differencing disk was created.
Hyper-V will search through the differencing disks and parent VM when there is a read request for data, starting with the most recent differencing disk first. The more differencing disks that are present the, the longer this process can take, so the more snapshot recovery points present, the more negative impact on read performance you will see.
This is where Hyper-V live virtual disk merge comes in. To improve read performance, it is good to remove unnecessary differencing disks. When one is deleted, it is merged with either the parent VHD or another differencing disk. Previously this was done with the VM off-line and required a reboot of the VM to finish the process. Now, with live virtual disk merge, differencing disks can be merged together while the VM remains online.
So, Microsoft has improved how snapshots can be managed, a very good thing. However, this does not replace the need for backup. An accumulation of snapshots will, as we saw, impact read performance in a negative fashion, so there is a limit of recovery points an administrator will want to create. Storage is required to host the snapshots and using extra, high performing disk space has a cost associated with it. Finally, the snapshots do no good if the storage they are on fails. Because of these reasons, a good backup remains a priority.
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