As detailed in the Veeam Backup & Replication User Guide, a snapshot is created on a VM that is being processed by a Veeam job. This creation of this snapshot causes the VM's base disks to be in a read-only state during the job's read operation. The snapshot that is created during this process is named VEEAM BACKUP TEMPORARY SNAPSHOT.
Veeam Backup & Replication itself does not create/remove snapshots. Instead, vSphere Storage APIs – Data Protection is used to send requests to the VMware environment to create and remove snapshots. After the API call is received and processed by the VMware environment, it reports back to Veeam Backup & Replication the unique ID of the created snapshot.
After all disks for a VM have been read, Veeam Backup & Replication sends another API call to remove the VEEAM BACKUP TEMPORARY SNAPSHOT. Using the unique snapshot ID Veeam Backup & Replication tracks the snapshot removal. If Veeam Backup & Replication finds that VMware has failed to remove a snapshot as requested, Veeam Backup & Replication may send additional snapshot removal API requests. The Veeam Snapshot Hunter may take further steps to resolve "phantom" or "orphaned" snapshots.