Recently I updated my Carbon Copy Cloner to version 3.0-b5. When cloning, there was a new option to clone a harddisk to a sparse image.
So what is a sparse image?
A sparse image is a file that can be mounted like any other disk, and the disk size will grow as you put more data in it. It is a dynamic disk image. It will reduce in size if data are taken out of the image.
A dmg image is another kind of disk image. It is a fixed size image and can be either read-only or read-write. If you created the image size 10GB, it will be fixed at 10GB, even if you only store 10MB of data. A .dmg is not dynamic but a fixed size image.