You keep the file, that's your backup. The more of them you have, the less chance of losing a lot of data.
The amount of data you lose if you get profile corruption, is only as far back as your last backup.
Personally I have GSM set to make an automatic backup every day (of all the data for every game), but set so that it won't create a backup unless the data has changed. So if I don't play for a week, no more backups are actually made until I do play. All this is in the software manual.
Each game has it's own folder, and in that folder are the .gsba files
To restore a backup you would just click on a .gsba file, which loads GSM and starts the restore procedure. Or you can start the software and load the backup. It will put the backup profile back into the original Steam folder.
I haven't had a profile corruption this year, so haven't needed to do this. But I keep my backups until they are too old, perhaps delete all but the last few once a month. All my backups are on another drive and in my Skydrive folder, so they save to the cloud also.
You can see in the pictures below, the folders for each game are sorted by date, and F1 2013 is far down the list, as I haven't it played for while. So even though GSC it saving a backup every day, it's skipping F1 2013 (but picking up other games) until I play, and it sees that my profile data has changed.
Inside the F1 2013 is 7 days worth of backups (2nd picture)
