So I have seen many questions over the past couple days about iTunes and how to backup your library and restore your library.  First off let me point out that if you are thinking that you are letting iTunes be your backup and when you lose all of your files that you can re-download them, think again, iTunes will not let you just re-download everything you have purchased.

You have to do backup your library on a regular basis otherwise you will lose it.  There are a couple of ways to do this.  The first is to back everything up to disc.  Go to 'File > Library > Back Up to Disc...' then have enough discs available to burn everything to.  The easiest way is to make a complete copy of your iTunes library to a network storage device or external hard drive.  To do this simply locate your iTunes library folder, generally under 'My Music' and then copy and paste the folder to a different drive.

The second part of this process is to get your library back.  First open iTunes and login to your account 'Store > Sign In...'  Now copy your library from the external drive or import it from your discs.  To get it from external simply copy and paste it into 'My Music'.  Then start up iTunes while holding 'Shift' and a message will come up asking you to choose a library.  Simply browse for your iTunes folder and click on it.  By disc you can restore your library by inserting the first disc you burned while iTunes is running and it will begin the process automatically.

The last step is to authorize your computer in iTunes to play music purchased with your account.  You can do this by going to 'Store > Authorize This Computer...'  Now you can play your iTunes content again.  Another note is that if you ever sell a computer or want to wipe it you need to deauthorize it first by going to 'Store > Deauthorize This Computer...' or once a year you can deathorize all computers associated with your account and then authorize the ones you actually use.