What is the difference between "restore backup" and "restore iPhone" in iTunes?
Restore Backup restores the contents of an iPhone backup performed sometime in the past. It restores content and stored data such as app settings, home-screen layouts, etc. Saved account login information is restored if the backup was encrypted.

Restore iPhone wipes the iPhone of all data &amp; apps and reinstalls iOS, leaving the iPhone reset to factory settings. The iPhone is left with just the latest iOS and the Apple default apps.

Find My iPhone must be turned off for either to work.