What is shadow copy and how to create it?

Hi,
Could you please let me know what is shadow copy in Windows 7 and how to create it?
I have rough idea that it is used to restore your system.
But I don't know what exactly it means by restoring your system and how to do it?
It would be a great help if you can tell me the procedure.
For your information i have windows 7.
Thanks,
Jeff
