How the backups work, in full
"Backups included" can mean almost anything. Here is exactly what happens on a site we host.
Every day, the server takes a backup of your files and database. It keeps the last 30 of them. If a plugin update breaks something on a Tuesday, we roll back to Monday. If you notice a problem three weeks late, we can still get to the copy from before it.
On the 1st of every month, a second system takes a complete copy of every site we host and stores it off the server, in a separate place. If the server itself had a bad day, the monthly copy is untouched.
On Business and Growth, we also take a backup on demand before we change anything, so every update has an undo button.