What does system restore can do?

System Restore is a component of most of the operating systems of Microsoft, like Windows XP, Windows Vista and Windows 7 that allows for the rolling back of system files, registry keys, installed programs, etc. to a previous state in the event of malfunctioning or failure.
A limitation which applies to System Restore in Windows versions prior to Windows Vista is that only certain file types and files in certain locations on the volume are monitored, therefore unwanted software installations and especially in-place software upgrades may be incompletely reverted by System Restore. Consequently, there may be little or no practical beneficial impact. Certain issues may also arise when attempting to run or remove that application. In contrast, various other utilities have been designed to provide much more complete reversal of system changes including software upgrades. Frequent or continuous monitoring may also adversely affect system performance, whereas System Restore's restore points are generally created quickly and sparingly.