File-level backups can be as simple as a file-by-file copy of everything in your directory hierarchy, to a backup that takes into account the filesystem metadata structures and that doesn't store duplicate data (commonly called data de-duplication). Restoration generally requires a minimal installed system, or a live CO. File-level backups do not have the ability to restore boot sectors or partition tables, so these must already exist or be created prior to restoring your files. Many file-level backup utilities provide the ability to back up only files that have changed since a previous backup.
File-level backups are most useful when individual files or directories are lost or corrupted, or need to be reverted to an earlier version, as only the files necessary need to be restored. This is not possible with low-level image backups.