Differential backups require a 'Master' snapshot to be stored on the Storage Repository. It is this Master that we use to compare and export the differences from the 'current' VMs (or snapshots) disks.

Unfortunately, they do take up space on the SR, but this is unavoidable and required for the Differential process. These snapshots are named 'XACKUP-MASTER~****' and should not be removed from your system unless absolutely necessary.