Automatically Back Up To This Computer?

I was just doing a manual backup of my entire iPhone and I noticed that in iTunes 11 it has the following option for iOS backups:

Automatically Back Up and then under it are ratio buttons, I can either choose "iCloud" or "This Computer". I had "iCloud" selected, but I honestly hate the iCloud backups because they're the biggest PITA to manage (there's never enough space for them and I'm not going to pay for it... and playing the whole "Select the apps you want backed up" game really isn't any fun, either.)

But what does it mean by "This Computer"? Does this mean that it'll automatically backup my iPhone over wifi in the background from time to time, the same as it does with iCloud right now? That would be amazing.

Or does it mean it'll automatically launch iTunes every time I plug my iPhone into my computer - that would be a PITA.

 

My iPhone hasn't been backed up to iCloud in 30 weeks (it tells me so) because iCloud is continuously full of garbage. I used to play the whole manage space on iCloud game, but I grew tired of it really fast.

Anyways, one question:
How is syncing different from backing up? Is there anything that's only part of a sync? Is there anything that's only part of a backup? Or does one completely encapsulate the other (which encapsulates which, if that's the cast?)

 

My latest backup to iCloud of my iPhone, from the end of November 2012, took up 4.8 GB. Camera roll was 1.5 GB, the next biggest thing was TWC (weather) with 8.7 MB, Google Drive with 2.3 MB, myAT&T with 1.6 MB, and from there everything is in the KB...Dropbox is 561 KB and I have 22 other apps each storing between 400 KB and 0.2 KB, each. In no world does that add up to 4.8 GB, and in fact, given how tiny a KB is compared to a GB, one may as well ignore those 22 apps and just look at the GB and MBs... they add up to... not even 0.1 GB, thus my backup, with my pictures, should have been around 1.6 GB, not 4.8 GB.

What the heck?