When doing a local clone with a plain 'hg clone A B' mercurial first tries to create hardlinks for files inside .hg. This speeds up cloning and saves harddisk space by using the same physical file for two directory entries. Both Linux and Windows NTFS file systems support creating hardlinks.
In situations where a hardlinked clone may not be ideal, users can use 'hg clone --pull', which will use the pull protocol for cloning and create a fully independent clone.