The way to do it by using repositories. You need to create a folder in moodledata with the name "repository", then create a folder inside that with whatever name you want. Upload your backup into this folder.
Then, enable the File System Repositories plugin in Settings > Site administration > Plugins > Repositories > Manage Repositories. Change the drop down for "File System" to "Enabled and visible, then click the settings button next to the dropdown.
Then, use the UI to create a new repository instance, selecting the folder you created earlier. Then save, and that repository should show up in the file picker menu.
Once the dropdown is set to Enabled and Visible, you can go into settings and click 'Create a repository instance'. From here you should be able to work out what to do provided the folder is in the right location.
