As far as I understand Milestones are done by the Coordinator to verify transactions. What do Snapshots do? Do they serve as backup? Do they clean up dead tips? Who issues them?

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A milestone and a snapshot are two separate things.

Currently, the network has the coordinator set up to ensure that malicious attacks cannot occur. The specifics of what a milestone is are detailed in this answer: What does the IOTA coordinator actually do?

A snapshot is a separate technical feature of IOTA that essentially captures a snasphot of all balances at a specific time and prunes the history of transactions that led to that moment, in order to reduce the memory burden of nodes connected to the tangle.

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