I thought - well I know - a successful shutdown will by default make a backup copy of the registry (that's what all the disk activity is), which can be reloaded with a "last known good". Usually the backup has the same issues as the primary, because by the time you know a real problem is afoot it has propagated to all 4 backup copies. The only real use is for an install of something that completely prevents booting.
I remember well when this facility was added to Windows NT - the first release (3.1) did not have such a facility, so if you installed a driver that would not work (very easy to do in the early days - wow this was 10 years ago now), you were dead, the whole thing had to be reinstalled. 3.5 allowed the "Last Known Good" choice to roll back to the previous configuration.
The backups are somewhere below system32 and are compressed.