The AVHD files are differencing disks which work in conjunction with the parent VHD file. At the point the snapshot of the VM was created, the parent VHD essentially became read-only and all the changes or additions to disk made by the VM were actually being written to the AVHD file. This allows snapshots to do their job by giving the flexibility to dump all those changes and return the VM to its original state at the top of the snapshot tree.
I had 3 AVHD files that I wanted to get rid of, so I turned the VM Off in question and the “Merge in Progress” appeared in the Hyper-V Manager so I let it run it’s course. About 50 mins later the merge process was complete and 2 of the AVHD Files where removed, great! but there was still one left? So I decided to turn the VM off again and what do you know another Merger was taking place, so again I left this happen and after it had completed the final AVHD File disappeared and I was left with one VHD File, FANTASTIC!
One thing I learned from this experience was that the VM writes to the AVHD Files and doesn’t appear to touch the VHD File (Parent File). I think I got myself into this situation because the Snap Shots were not deleted corectly. It seams that Hyper-V is different in the way it deals with snapshots over xenserver or vmware.
VMWare and Xenserver both automatically merge its snapshot files into its parent file once you delete the snapshot from the snapshot manager. With Hyper-V it seams as if you must shutdown the server the snapshot was deleted from for a period of time while the files merge. This definitely changes how ofter or for what reason you would want to take snapshots of your server.
Do keep in mind you never want to run a server for long periods of time with snapshots. When running a server with snapshots you are reading files from within multiple virtual hard drive files. This degrades server performance significantly. With Hyper-V if your parent VHD file is 200GB to start with and you take a snapshot. That snapshot file will grow constantly every time a file needs to be written to. Running Hyper-V servers with snapshots you run into the probability of running out of hard drive space on your host server as the snapshot AVHD file constantly grows in size till you delete the snapshot and shutdown the server to allow the files to merge.
I found a good 2 part article about reclaiming lost hard drive space on Hyper-V on Virtualadmin.com