Winsxs isn't the hidden folder for system restore. It's where Windoze keeps all the binaries, catalog files etc. I have system restore turned off.
One of the largest changes between previous versions of Windows and Windows Vista was a move from an INF described OS to componentization. A component in Windows is one or more binaries, a catalog file, and an XML file that describes everything about how the files should be installed. From associated registry keys and services to what kind security permissions the files should have. Components are grouped into logical units, and these units are used to build the different Windows editions.
All of the components in the operating system are found in the WinSxS folder – in fact we call this location the component store. Each component has a unique name that includes the version, language, and processor architecture that it was built for. The WinSxS folder is the only location that the component is found on the system, all other instances of the files that you see on the system are “projected” by hard linking from the component store. Let me repeat that last point – there is only one instance (or full data copy) of each version of each file in the OS, and that instance is located in the WinSxS folder. So looked at from that perspective, the WinSxS folder is really the entirety of the whole OS, referred to as a "flat" in down-level operating systems. This also accounts for why you will no longer be prompted for media when running operations such as System File Checker (SFC), or when installing additional features and roles.
That explains why the folder starts off big, but not why it gets larger over time – the answer to that question is servicing. In previous versions of Windows the atomic unit of servicing was the file, in Windows Vista it’s the component. When we update a particular binary we release a new version of the whole component, and that new version is stored alongside the original one in the component store. The higher version of the component is projected onto the system, but the older version in the store isn’t touched. The reason for that is the third part of why the component store gets so large.
Not every component in the component store is applicable, meaning that not every component should be projected onto the system. For example, on systems where IIS is available but has not been installed, the IIS components are present in the store, but not projected into any location on the system where they might be used. If you’re familiar with how multi-branch servicing works in previous versions of Windows then it’ll make sense to you that we have a different version of the component for each distribution branch and service pack level, and that all these different versions are also stored in the WinSxS folder, even if they’re not immediately applicable. So a single Post SP1 GDR package that contains an update to one component will end up installing four versions of that component in the WinSxS folder – double that on a 64 bit operating system for some components.