Gavin,
No problem asking.
1) SMVI stores the backups as NetApp Volume snapshots. The only place you can "see" them is by running snap list [volname] from ONTAP on your controller and looking at the list of snapshots. Because SMVI stores them as snap backups, they don't get copied and stored anywhere like a traditional backup solution.
2) Better than that. Because they are snap backups and not traditional backups, you only store the blocks that have changed over time. For instance, when you snap the backup initially, it takes 0 MB in space. As you change 10 MB of blocks later, your backup takes up approximately 10 MB in space. This is a vast oversimplifcation, but I think you get the idea.