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This option reduces the size of the backup image by excluding any unused or deleted blocks within the file system on the virtual machine. (This option is enabled by default.)
Note the following:
This option applies only to backups of an entire virtual machine (it does not apply to backups that specify individual files only).
This option uses proprietary mapping technology to identify vacant sectors (allocated but empty) within the file system. If the virtual disk contains raw space, that raw space is included in the backup.