What does restore back-up from an iPhone really mean

Hi everyone
I haven't connected my iPhone to my computer/iTunes in over a year because I had computer issues that I just recently was able to fix. However, in the meantime I have purchased well over a hundred songs and over 50 apps. When I plugged my phone it, it gave me the following message:
"This computer has previously been synced with an iPhone or another IOS device"
and then it gave me two options:
1. Set up a new iphone
2.restore from back up of my Iphone (but the last back up was from May 2011)
I'm not too sure how to proceed and am afraid that if I restore from back-up, I'll lose everything that I've purchased from May 2011 to present.
This may seem like a really simple question but I must honestly say that I am stumped...
Any help would be appreciated.
Thank you in advance.

Hi Bhazel,
Thank you for taking the time to help but I was wondering when i 'restore from back-up' what happens to the new apps? And will it delete the info contained within the actual app itself?

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