In the Destination tab of the sync settings you can select the backup strategy, which defines if and how overwritten and removed files can be recovered.
The default. When a sync causes a file on the destination to be overwritten or removed, the old file cannot be recovered. If you’re only interested in having a copy of the latest version of a file, this is exactly what you want.
Move old files to the trash
Files that should be overwritten or removed are moved to the trash. The trash keeps a flat list of all files that are moved to it. Since the original directory structure is not preserved, you can only recover individual files before the trash is emptied.
Move old files to…
Files that should be overwritten or removed are moved to the selected backup directory. The original directory structure is preserved, but to save multiple versions of the same file in the same directory, each filename is appended the current timestamp. The timestamp has the format yyyy-MM-dd[T]HH-mm-ss+ZZZZ, which is independent of the current system locale and takes the timezone into account. Moreover, this timestamp will be used in order to determine which backup files lie outside of the selected timeframe and will be removed.
You can select a custom backup directory for each destination base of the sync item. The backup directory has to be on the same volume as the corresponding base; if inside the base itself, the backup directory will be automatically excluded.
Incremental, link unchanged files
Each sync creates a directory named with the current timestamp. All unchanged files are linked to the previous backup directory, if any, and new files are copied into the new one. The linking is achieved by means of so-called hard links, which allow referencing a file from multiple directories. Regardless of how many hard links exist to a given file, no additional space is required. Hard links look just like the regular files they were linked to and point to the same data, so editing the contents of any of them will update the others as well.
Because editing a file also updates its hard linked copies, incremental backups are not supported for two-way syncs, since every base would be at the same time source and destination, and editing a file on the destination causes the linked files in the older backup directories to be updated as well. You can, however, create a separate sync item for each base of a two-way sync to create an incremental backup to a separate directory and, optionally, make a dependency chain.