Lion creates a hidden 650MB partition on the hard drive where it gets installed. This is the recovery disk. If something goes wrong with the OS, one can start the computer and press Option key (or command/Apple+R) immediately after the chime, and on the gray screen that hidden restore disk will be visible. If you click on it, it opens up some options including DiskUtility that can repair the damaged OS on the hard drive or replace the OS. This makes creating a bootable disk less necessary.