The space was allocated to the database files, but not used.
You can create a new database, make it 10GB in size, and see the files allocate that amount of space on disk. However, until you put data in the database, the file is essentially empty, and your backup file size will be minimal.
HTH
Seeing that the recovery model is set to simple and msdn states that the simple recovery model does not support point-in-time recovery - Does this mean that I won't be able to use my transaction log backups to restore the database in a disaster to an hour before it happened?
Even taking a transaction log backup is not supported for databases using the SIMPLE recovery model. This is a restriction of the database engine based on how this recovery model works, and the recovery features it doesn't support, as you mentioned.
A transaction log backup maintenance plan task automatically skips databases in SIMPLE recovery to avoid causing errors.
Which backup should be done first, the database backup or the transaction log backups? Articles that I'm busy reading say I should do the database backup first and then the transaction log backup else I will get maintenance plan errors, but I'm currently first backing up my transaction logs and then data databases and I'm not getting any errors.
For the reasons I mentioned above, it won't matter for databases using SIMPLE recovery, as they will be skipped by the transaction log backup task.
For databases in the other two recovery models, a full backup must exist before you start taking transaction log backups (just the first time), or you will get an error -- this is probably what the articles refer to.
Point-in-time recovery ability is normally driven by business need -- in other words, you determine how critical the data is and how much you can afford to lose, then set the appropriate recovery model to meet those needs, and finally create a backup solution.
Even though SIMPLE recovery does not support point-in-time recovery, if an hour of data loss is okay, perhaps a differential backup solution could work for you. (There are far too many variables that go into developing this kind of solution to give you a complete picture with what was provided in the question.)
Best Answer
Log backups only backup actual data and do not backup empty space.
It sounds like there are still processes running overnight. Got any index rebuilds or any maintenance tasks (aside from DB backups) that may be running overnight? Just because you think the server should be quiet, doesn't always mean that it is. There could be overnight batch jobs, miscellaneous tasks, all sorts of stuff.