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When I remove a snapshot, it just says 'Merging differencing image'. I don't know how much room each snapshot is taking. It's certainly not copying everything.

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up vote 8 down vote accepted

When you take a snapshot, VirtualBox stops writing to the .vdi and starts writing to the snapshot file. When you merge, it merges the snapshot file into the original .vdi and you're left with the original .vdi plus the changes.

To answer the question explicitly, yes.

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It must be VERY little space because I just removed 10+ snapshots and didn't notice a difference on my drive's panel – AlxVallejo Mar 22 '12 at 21:11
Like I said, it's some sort of (probably optimized) diff. But I've blue screened my machine before writing to snapshots, filling my 120 GB OS drive (by default VirtualBox is configured to use AppData to store its stuff), they can definitely reach gigabytes in size. – gparent Mar 23 '12 at 13:48

Yes, they do, and apparently snapshotting also increases disk space usage compared to just a single logical disk.

Check out this excellent blog post on how to merge snapshots and compact them to reduce disk space used:

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