Catalog backup is file backup+tag/album backup. It ensures that all the tag and album associations you did in Organizer on my machine can be seamlessly transferred to Organizer on another machine.
Thanks for responding. Do you mean that the file backup done by Windows does not backup the tag and album information so, I still need to do the catalog backup?
Yes, all the organizing work (tags, albums etc) will not be available by Windows backup. Organizer's backup ensure that the state of PSE on machine will be exactly same on another machine after restoring the backup. For more details refer to: http://help.adobe.com/en_US/elementsorganizer/using/WS3d021fd412237a2f14afb0171392eec10c6- 7ffe.html