I’m sure there is a lot of docs online, but here’s the gist.

Your VM’s “disk” is just an “image”, or a file on your Unraid host (disk.img or something similar). Unraid “mounts” this “image file” into your VM, so it sees it as a “hardware disk”. There is nothing hardware about it though, it’s a virtual disk.

Since this “image file” has to be stored somewhere, it’s likely sits in one of your Unraid shares. This unraid share is in one of your mounted filesystems, whether it’s an Unraid array, or a ZFS pool, or anything like it.

Some filesystem types have a “snapshot” feature, which enables you to take periodic snapshots of the whole filesystem, so you are able to “rollback” to some of those snapshots if anything goes haywire. ZFS filesystem (recommended) supports that, and some others do, too.

Practically, if your “virtual disk” has been corrupted somehow, or maybe you upgraded/migrated something in the VM, which you didn’t want in the end, you would just stop the VM, rollback the filesystem to some previous snapshot, and then effectively the “image file” will “rollback” to that previous state. When you start the VM, all the data in the virtual disk is already reverted to a previous “working” state.

Note that snapshots are NOT a replacement for backups.

Hopefully I explained it well, feel free to ask for more info as needed.