I believe a system restore from a local backup only restores the database, not any devices and not the software revision on the hub. The hub can be reverted to a previous version without having to do a database restore but I would definitely make sure you have a current backup saved locally just in case.
Curious to know what version you were on before the issue started and what version you upgraded to. I didn't notice any ZWave issues with the .128 update but I did start having issues with the Alexa skill. I reverted to the previous version and even removed and rebuilt the skill but so far with no success. I don't think it was related to the update but I am still waiting for the folks at HE to get back to me with a solution so who knows.
I have been updating regularly so whatever was the last version offered to me was the last version I was using.
I did a version rollback but not a system restore although I have a saved backup from before the upgrade.
I spent the morning going around the house pulling the air gap tabs on my Zooz dimmers and fiddling with the Inovelli Reds. I'm limited to what I can do without waking everyone up.
I saw the light on one of the Z-Wave repeaters flashing so maybe the mesh is rebuilding.
Hope so! Another trick I have seen is to shut down the hub and then remove power for 30 seconds or so. Apparently this gives the zwave radio a chance to reset or clear buffers or something. The advice is generally to remove power from the hub by unplugging the AC adapter from the outlet rather than unplugging the USB cable from the HE since the surface-mount connector on the HE can get stressed. Dunno if this will help you or not,
I generally try to wait a few days before installing a new update unless there is a feature I need in the new update. Then I scan. the forum to see what sorts of issues people had with the update and make a decision based on their experience. I did not do that with .128 because I misread the release notes and thought it did something that was actually a feature I already had, but I have since returned to .126 to wait it out a bit, and in hopes HE gets back to me with an answer to my wildly misbehaving Alexa integration,
If you are experiencing problems immediately after updating the platform code, then the simplest way to confirm that the recent update caused it, is to go to the Diagnostic Tool and "Restore Previous Version". If devices start working, then you know it was the update. If restoring previous version doesn't help, chances are that main hub's database became corrupted. To solve that problem, you will need to perform a Soft Reset with restore, following instruction in this document:
If the Soft Reset doesn't fix the problems either, it means that the issue is with one or more devices in your mesh acting up. To resolve that problem, you will need to identify which device is misbehaving and either power cycle the device, or remove it altogether from your mesh.
There have been no changes in the Z-wave or Zigbee database, so you don't need to worry about restoring those databases. The answer to your question, if the local backup saves the Z-wave or Zigbee database, is no. Only the cloud backup saves the Z-wave database, via Hub Protect.