Replicate - What does it really backup?

I've had Replicate backup running for over a year now. I don't think much of it daily because it just does what it does.

I recently went in to look at some older backup files and was surprised (when viewing via Windows Explorer) that each backup folder (the date/time stamp-named ones) was as big as it was. Each was as big as the actual data source.

I thought, from reading the logs that Replicate was copying the changed files (eg incremental backup).

A typical log would say:

Total files processed: 471284
Total files transferred: 33
Total files size: 74.06 GB
Total files size transferred: 11.95 MB

This is a morning backup.

Now, if I go look at the folder it created for the backup, it's 74.06GB. And if I delete one that failed, like "2013-07-10 12-27 (failed)", it says it's deleting 74GB and will take 30 minutes.

So does Replicate duplicate the last backup folder and start from there, then applies file changes to that folder.

Folder A 1/1/14
Folder B 1/2/14
Folder C 1/3/14
Folder D would be a copy of C, then copy or remove files based on that changed from 1/3/14?

Except apparently not, because if I go into RADIar and look at the volume, 74GB was not removed to the available amount.

So how is a Replicate folder really formatted and what's in it?