Microsoft produced a series of videos about Hyper-V last year from the Program Managers. Based on recent investigations, I found a good explanation of how snapshotting works. The VHD snapshotting video is a bit casual but captures the essence of the engineering design.
The implementation does seem a bit rough in places compared to competing products. Persistence will pay off.
My overall biggest concern is that the snapshotting mechanism should have built into the VHD spec. Currently the implementation is expressed as code that manipulates VHDs for the purpose of snapshots. The difference is subtle but enough to make this a Hyper-V only way of looking at things. Unfortunately this will lead to other vendors to consider doing their own snapshotting technology around the weakness of the native VHD format.
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