What exactly does a Windows 10 System Image do?

Found my old school laptop still running Windows 10 and decided to back it up. I found that if I go into control panel > System and Security > Backup and Restore (Windows 7), there is an option called Create a system image. I can see that it is backing up my EFI, boot partitions and C: drive, however, what exactly is backed up and how would restoring work?

So like, I assume it does what it says, backs up the entire C: drive, so that would mean every folder on the local disk, including Downloads is backed up. But with regards to the boot partitions, does that mean that I can take these files and, for example, whip up a VM or how would that go about working? Or, would I have to boot into a basic windows 10/11, then go back into control panel, click restore from where I saved the backup, and then it just boots into the exact same computer I guess? Like with even minor details like the background image and taskbar layout the same?