You still need to create "repair discs" or what your PC allows. This maybe different on an OEM type PC. Once that is done following whatever instructions they gave to do. Google for your PC model# any reference. But, if OEM type like HP or Dell, etc., their support website gives those details. OEM setups have supplied their own s/w to do all this. Have blank discs to burn those discs and once done store in safe place. If 100% MS supplied method, they have the requirements, google for your OS back-up process. Here is the MS link:
In one form or another the repair disc upon booting, will display some options. Most notable is the "return to earlier date" or restore and/or similar terms. That will then call on the "back-up" or image of your PC. In most cases, returning data from source to destination needn't be the same size. However, often enough its best to have same size to larger, but that all depends on what method of image/back-up was made. If any given s/w allows it, it shouldn't matter or care, it wants only "source and detestation parameters". The only caveat is as you've noted is size, if the destination is too small it will error and display before proceeding. Other than what I stated earlier it will become apparent, then get a larger storage media to continue.
FYI- The wording or recovery/restore can be confusing. As well as back-up and image as all this at times seems interchangeable, but not is NOT always the case. This is why I stated you better understand whatever method you use should have also the "creation" to make whatever and the "return" process as the other half of all this.
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