There is often no need to change this option; your hard disk image is just like a computer's physical hard disk - it stores all of the information in your virtual machine. Unless you have a good reason to change this option, don't bother.
If you have decided you want to change the hard disk image, be aware that qemu supports several disk image types.
File Type | Extension | Read Mode | Comments |
Raw Image | .raw / .img | read / write | default no frills format |
Qemu Copy On Write (qcow2) | .qcow | read / write / overlay | qemu native format. supports many advanced features. |
VMWare image | .vmdk | read / write | |
Parallels image | .hdd | read only | |
Virtual PC Image | .vpc | read only |
In addition to these formats, qemu supports the vvfat, bochs, dmg, cloop, qcow, cow, and host_device file types as well. Little info is available on their support however, so if you need to use one of these your milage may vary.
This button will upgrade your hard disk image from whatever format it is using to the qcow2 format. your original image is preseved, so you will need at least enough disk space to hold a second complete copy of your image.