A recovery is a process of launching and running VMs from backup files stored on the cloud in cloud targets. The entire process is orchestrated by the Cloud DR Server that creates and uses Restore Service VMs that convert files from raw data to fully running VMs on the cloud.
There are 2 types of recovery: a DR test that is used to verify that a backup can run on the cloud, and should be used for short term validation, and a Failover, that should be used in a scenario that the on-premises production virtual machine is damaged or inaccessible. The recovery process itself is identical for both.