WAL-G is an open-source continuous archiving tool used to set up and recover from physical backups in Postgres, making it easier to restore database state to a particular moment in time. The tool handles storage and retrieval of physical backups and WAL archives from a chosen cloud storage provider, such as AWS. To set up WAL-G, environment variables are configured, including AWS credentials and resources, and the database is enabled for archiving with specific commands. Regular physical backups can be scheduled using a CRON job to improve recovery time. In case of disaster, physical backups in the S3 bucket can be used to recover and restore data on a new instance by configuring environment variables, stopping the database, switching to the postgres user, preparing the database for recovery, setting restore_command, and restoring from the latest physical backup. Additionally, Point-in-Time Recovery (PITR) can be achieved by setting recovery_target_time and recovery_target_action, allowing restoration of data up to a certain point in time.