2011 Air's partitioning: what's stored in the smaller partition?

hello,

today in an attempt to discover how to restore or reinstall lion, I booted with command+r.

I see that there are two disks. one (main) with larger capacity of 121 odd gbs and the other with 1.3 gb or so.

if I ever decide to reinstall lion from scratch and have the machine reset to default (all deleted and gone, brand new like the first time it came out of the box);

will it install from that small drive? or will it download the huge 6 gb lion over the internet and then install?

thank you for anyone who shares their experience on the subject.
cheers!

 

thanks!

in what case download from apple servers becomes necessary?

and how come the download file is 6+ gbs whilst the restore partition is 1/4 of it?