When a backup for a VM is started, QEMU will install a "copy-before-write" filter in its block layer. This filter ensures that upon new guest writes, old data still needed for the backup is sent to the backup target first. The guest write blocks until this operation is finished so guest IO to not-yet-backed-up sectors will be limited by the speed of the backup target.
With backup fleecing, such old data is cached in a fleecing image rather than sent directly to the backup target. This can help guest IO performance and even prevent hangs in certain scenarios, at the cost of requiring more storage space.