Backup options are concered with files from what I can see after some
tests. Extra directory (--backup-dir) is an addition to keep things more
tidy. I guess the idea was to have some sort of protection against
careless rsync invocation, etc. - not as a solution for incremental
backups. I don't really know for sure if it's intended or not though.
As for incremental backup, --link-dest is generally used for that
purpose, and saves a lot of space due to hardlink usage. You will likely
need to make some shell script for automation's sake (or you can look
for premade ones - e.g. rsnapshot is often quoted).
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