A backup of a website is a copy of its content, that's kept on a different server and can be restored if something happens. This feature is very effective, since 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 site is backed up, it can be restored the way it was until the problem appeared, so there will not be any damage, or at least it will be little, based on the particular situation. Keeping backups on your computer system isn't very feasible, as you would have to do it at least once per day and you may still lose info if your last backup is not recent enough. In this light, you'll have to rely on your web hosting company, so you need to double-check their policy on the backups, as some companies generate backups once every week, that will do no good if something goes wrong with a website that's being used and updated all of the time, like an online store, for example.