Why do clone style backups?

Why, because if you think something is perfect or at least working just the way you want it to, why would you want to create it from scratch if it was to break. But beware, like Skeletor here, if you have all the clones working at the same time, they will all want to be in charge!

What is a clone backup?

Basically, if you clone your hard drive (HDD) you are taking an exact copy. Now if you lose your hard drive, it breaks or something else unimaginable happens to it, you just have to pop the clone in and you're back in business. Well... almost. The clone is a snapshot of your hard drive at the exact point in time that you make it. Therefore, if you made the clone a month ago, that's what you've got, everything from a month ago.
There are ways around this though. One is to make regular clones, that does get boring quickly though, especially as you can't use your computer for anything else when you're making a clone of your hard drive. The other is use the cloud. Using Dropbox or InSync, a folder on your computer (and all subfolders contained within) are backed up to the cloud. If you put all your working documents in here, so your word, excel or anything else that you change on a daily basis that so happens to be stored locally on your computer, they are synchronised to the cloud.
Now, say our hard drive fails, we can insert our month old clone hard disk and dropbox will synchronise the missing files and update ones that have been changed in the month. Simple!
With larger files that can't be synchronised with dropbox or other similar services, you have a choice of finding a service that will synchronise them, storing them on external media or updating your clone more often.
Program files can stored in the same way, but I would suggest that you don't add programs too often and therefore just update the clone when you've done a complex installation of a new program or installed a few since the last cloning.

How to Clone

So I've talked a lot about cloning and what it is and why to do it, now it's time to look at how. Simply I would recommend Acronis True Image, but there are other cloning programs out there.
I've also used Acronis clones to create a lot of computers with the same configuration in an office environment, it beats the hell out of doing many... many installations of windows, your corporate software and configuring each, however there are considerations when doing this like DHCP and computer names, but that's a different story.