do you mean the /usr/bin/backup command (which is /usr/bin/filetool.sh -b) because if so, those tools use tar and gzip to coalesce and compress the backed up content - and logically so - in its reading off the filesystem the data involved.
dd permits access at a more physical level - copying the underlying image of the source - and yes, as such, that would include free blocks as well as in use blocks - because - they're all just blocks.