When you do a backup (in full recovery mode), you only
truncate the log, you don't actually physically shrink its size. Truncating the log simply marks the committed entries as unused and available. To physically shrink the file, you must execute a DBCC SHRINKDATABASE statement, or a DBCC SHRINKFILE statement referencing a log file. The log file is also physically shrunk if the autoshrink option is on and the database autoshrinks.
See BOL table of contents SQL Server Architecture, DataBase Architecture, Physical DataBase Architecture, Transaction Log Architecture, Shrinking the Transaction Log (whew!).
Jeff Mason
Custom Apps, Inc.
www.custom-apps.com