It creates a copy of the files where your data is saved, terrdb.accdb and terrdb2.accdb into the backup sub-folder and another folder with the time and date. (Note: all other files can be restored by reinstalling the application from the Downloads section)
If you checked the box "Send backup files to Multi-Terr" in the Options module, then a copy of these two files is also sent to our server.
See the FAQ How can I make sure I do not lose my data? for more information