So when you hear people talking about "ghosting" a drive, they're probably using the utility (or similar software) to image files and / or data -- not operating systems.
You can "Ghost" a drive, with or without an OS on it, in various ways - you can clone one drive onto another, for example when you buy a bigger drive to replace the old one that your OS is on. Often drive manufacturers will give away a cut down version of Symantec (formerly Norton) Ghost for this purpose, and include the CD in the drive packaging.
Another thing you can do is to make a disk image file of a disk or partition on another drive or on a DVD-ROM or RW or a series of them. That way, if anything happens to your OS you can restore it, either to the original disk or to a new one.
I've used Ghost as a backup, and actually restored the operating system and all files to a drive
but it was the same drive in the same computer.
Exactly. It needn't be the same drive, it can be a newer faster bigger one, as I mentioned above, but it has to be in the same computer.
I was trying to avoid the hassle of having to reload Windows 2000.) In that case, Ghost restored everything with no problems.
That is what it is very useful for.
Another thing that Ghost is used for: say you run a company and have a few, or dozens or hundreds of identical computers, you can set one up just right, with a corporate (no activation) version of Windows, make a Ghost image of the OS disk, burn it to DVD-ROMs, and deploy it to as many PCs as you have Windows licences for.