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Time Machine can be made to be "aware" of files that are effectively filesystems themselves - you can watch it as it backs up VirtualPC for example. It doesn't take the entire 10G virtual disk image every time.

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I'm not sure this is Time Machine. I know that in VMware Fusion, at least, there's an option to turn your monolithic disk image into a set of smaller individual files. If you turn this on, then Time Machine only has to backup the smaller part-image file that's changed.

I know I've definitely seen Time Machine re-copying entire 10 GB virtual machine disk images before, with Parallels and VMware Fusion images, before I discovered this feature.

i've never heard this before. how is it done?

I can't find any documentation on it on Apple's website, but it's easy to see it working. Annoyingly it doesn't do with with VirtualBox which is what I use now. Well it kinda does - it recognizes the VDI files as virtual disks, but can't open them with the VirtualPC plugin (in /Library/Plug-ins/DiskImages/).

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