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I found I had deleted a file I needed to keep, so I used the File Vault icon in the top right, and selected "Enter Time Machine".

After successfully restoring the deleted file from a snapshot from several days ago, I realised that my NAS - which functions as my backup disk, had been turned off the entire time. The Time Machine icon had the usual exclamation mark in it for when the backup disk is unavailable.

How did Time Machine restore my deleted file, when the backup disk was not available?

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I believe it is because Time Machine (in 10.7 and 10.7) keep local backups to augment the external drives.

He is an Apple support article.

"Local snapshots compliment regular Time Machine backups (that are stored on your external disk or Time Capsule), giving you a "safety net" for times when you might be away from your external backup disk or Time Capsule and accidentally delete a file."

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