reformat/reinstall question.

Hey, I have to reformat/reinstall snow leopard. I have read a few things hear and there and just have a few more questions.
i started to re-install snow leopard and it never said anything about reformatting the hard drive. It just asked for my password. Does it automatically restore my disc back to factory? I have all my time machine backups on an external. Once I restart I can hookup my external and just restore the settings from the last time it was running right. right? Thanks in advance