The CIAO configuration database is the heart of CIAO, it controls what databases are watched by whom and in what ways. It controls where the log is that contains all the databases and versions, plus it can be used to initialise promotions to the next environment. On a single development server there should only be one configuration database on the server, with none locally. This is because any database being developed should only be watched in one configuration database to avoid fragmentation of the log.
The CIAO Log contains all the versions of elements and the whole database. It is the history of design changes that gets used for audit reports and rolling back to previous version. Although you should back up the config and the development database, it is imperative that the CIAO log is backed up as the history it contains can’t be recreated without redoing the development work. It is best practice to have one CIAO log for each development database to ensure the size of the log is not too big. Very large log databases affect the performance of CIAO.