What is the difference between VSS Full Backup and VSS Copy Backup in Windows Server 2008?

Thankfully the Storage Team at Microsoft ("File Cabinet") has an answering post on their blog:

"If you are using only Windows Server Backup to protect the applications, you can use any option to backup the data.

However, if you are using a third party backup application, you should not use VSS Full Backup because it will delete the logs at the end of the backup. If the third party backup application relies on those logs to take incremental backups, it would take full backups all the time – a less than optimal situation…"

(See also this TechNet forum post for more clarification.)