Watermark / Best Practices
Create Backup Files
It's highly recommended that have backup files turned on. The only reason you would turn them off is if you have downloaded all the backup images to save server space and you know that the system does not have to create any more watermarks.
Download Backup Images
The backup image location is found in the module footer. If there is ever a case that your server runs out of disk space or there is some other hiccup when a watermark is being created, it's possible that there could be data loss. This is true not only for the watermark module but everything that happens in your store.
Occasionally downloading the images and saving them locally is a great idea.