Google Galaxy Nexus Android mobile technology platform 4.0 Users Guide - Manual (Page 100)

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G Automatic restore. Check this option to restore settings and other data when you reinstall an app.
This feature requires that you are backing up your data with your Google Account and that the app is
using the backup service.
G Factory data reset. Touch this option, then Reset phone to erase all your personal data from inter-
nal storage, including information about your Google Account, any other accounts, your system and
app settings, any downloaded applications, and your music, photos, videos, and other files.
After resetting your phone, you'll need to re-enter the same information requested when you first set
up your phone. If you've been backing up your data to a Google account, an option during the setup
process allows you to restore it.
Some third-party apps also make use of the backup service, so if you reinstall one, its settings and data
are restored.
Related topic
Why use a Google Account?