The report/delete obsolete commands works in two steps.
First, we identify the oldest full backup (i.e. full or level 0 backupset, or image copy) of every file that is not obsolete, as defined by the retention policy (either REDUNDANCY or RECOVERY WINDOW). Every older full backup is obsolete.
Then, all archived logs and level > 0 incremental backups that are older than the oldest non-obsolete full backup are also considered to be obsolete, because there is no longer any full backup to which they could possibly apply.
Note that a level > 0 backup performs much the same function as an archived log – it causes a full backup to move forward in time, so those backups are treated in the same manner as archived logs for the purposes of retention. Incremental backups are not restored using the restore command, they are restored using the recover command if it will cause fewer archive logs to be needed during recovery. When you restore it is always only from full or level 0 incremental backups of