If they use the Hyper V agent, they can enumerate the list of VMs even if these are located in local or shared storage. They can do a backup using VM level in this perspective. If they are backing up via the Hyper V Host themselves, the VMs will be backed up as flat files, means that recovery of VMs is via full VHDs and configuration files. If backups are done VM level, the recovery can go as granular to files and folders inside the VM. So the key differentiator is the recovery capability when doing backup from the Host or from VM level.