As the title said, how does the Backup in MIUI works? Is it like nandroid backup with CWM? If i upgrade to the latest ROM, can i restore everything using this Backup?
Think of it as a Titanium Backup type program. It will backup the the settings and data for system apps and it will backup the apk, settings, and data for user apps. It will store the backups on your sdcard.
if you update to far from the original backup and transfer settings and all you might get some problems but if you transfer just sms etc and not settings you should be fine.