Seems like they could have something like a (but a little more nuanced than) union-FS for the primary partition joining it with the recovery partition. Only updated files would need to take space on the primary partition, untouched files would be sourced from the recovery partition. To restore you just wipe the primary. Of course, there is an entire blog written about how sensible ideas like that are completely impossible: http://blogs.msdn.com/b/oldnewthing/
