When formatting/restoring the PlayStation 3 there are five different options to choose from but only one of them (not stated in manual) actually performs a full factory “out of the box” reset.
The following options can all be located within the Settings > System Settings menu (excluding the hard reset option).
Note: None of these options will delete your PSN account or trophies (if synced).
1.) Quick Format
In a nutshell the quick format option will simply erase all the data (saves, videos, music, etc.) on the drive. You may however be able to restore this data via specialized data restoration software but don’t count on it.
Note: The option will not erase your user profile(s).
2.) Full Format
Similar to quick format this option will delete all your data with the exception of taking up to 25 hours (or more) depending on the drive size. Software data restoration is pretty much out of the question here. I recommend this option if you’re planning on selling your console.
Note: The option will not erase your user profile(s) and will automatically shutdown the machine after completion.
3.) Restore Default Settings
This option will restore your PS3 back to its basic fail safe settings (not factory default). Even by doing this option your PS3 user(s) will still be active and your PSN account(s) sign-in details will still be stored. Also the clock will still be set and controller(s) will still be paired.
4.) Hard Reset
This option is usually performed when connecting the PS3 to a different display. To perform a hard reset make sure your console is turned off. Turn the console on and keep the power button pressed in for a few seconds until you hear a beep (apparently it’s a triple beep on the older PS3). Your system will be restored to fail safe settings as per the option above (3).
5.) Restore PS3 System
The last option is actually the real deal. This option not only restores the system settings but also performs a format (full or quick) but there’s a catch (that’s not stated). Unlike option number 3 above the restore performed here is actually a full factory reset. This option will not only delete all your data but will also remove your PSN ID sign in details (not actual account), reset the internal clock, delete user profile(s) and un-pair the controller(s). This is the option to perform if you want to reset your PS3 to out of the box condition.