Sparse image newbie question

[galleyleo]

Originally Posted by James

The idea with a sparse disk image is that you can put it on your Backup Drive with the other files stored there, like next to your media library backup or over a network to another computer/server. You treat the sparse image just as you would a folder.

Ok, I get the utility in sending a file of ones hard disk to a network server for safe keeping, as I read that SuperDuper! cannot write directly to one. But this is the first time I've read specifically where to install the sparse image, which is what I have been looking for. I realize I should have taken Backup 101before asking these kinds of (stupid?) questions but as long as I've confessed to my ignorance I'll forge ahead.
Ok; you create a sparse image file (backup) of your entire hard drive to put on your say,external hard drive which already contains the backup of your computer hard drive (?) If this assumption is correct, I will pass on the other obvious questions which arise as I don't want to waste any more of your time. Thank you for bringing some clarity to this somewhat (to me) arcane subject.