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Unfortunately, the answer depends a lot on the context. In general, when someone says "backup retention policies," they are referring to a backup application's definition of a retention policy, which is typically established at the backup media level.
Fundamentally, if a backup tape is created and managed by the backup application, the backup retention defines how long data on a given tape or tapes will be preserved prior to being eligible for tape overwrite, and therefore data removal. In this model, after the retention period of the media has expired, the backup media space is made available for overwrite; new backups (tape recycling) can then use the same media.
In most implementations, if the tape is not present in the tape loader, or is set up to prefer new media first, expired tapes are never overwritten, and data can be accessed by scanning/or cataloging the tape data. A variation on this theme is that each backup session is given a specific retention period and is expired first from the catalog; when all sessions are expired, that tape is (eligible) for recycle. The data in most cases could be recovered if absolutely needed. Some products combine both methods.
Traditional backup products also leverage disk as a target, but in many cases the retention model is the same. If you are performing hot backups of the Exchange databases, the retention is at the database level, not the individual message level. If you are also performing brick-level backups, in most cases, the retention period is at the session level; this means all mailboxes backed up at that time are retained and disposed at the end of that period.
Again, depending on context and implementation, an archive retention period should use date attributes within the data, for example a file's creation date, or a messages "sent or received" date. In this model, the retention period is managed by collecting and persisting metadata at archive time, and the application manages and disposes of the data or messages based on this time, regardless of when the archiving application first saved it.
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