What Shrinks When Shrinking

A huge (and never used) database log was taking up about 4 GB of HD
space. We want the data for historical capacity, however, don't care
about the transactions log.

After a bit of research I ran the script on:
http://support.microsoft.com/defaul...&NoWebContent=1

(which works just fine on Sql Server 2k)

And then

DBCC SHRINKFILE(RamdomDataData_Log, 2)

This shrank the log file from 4ish gigs to 2 MB.

Of course my boss did backflips and wanted me to do it to *all* the
databases. I told him that it was probably a bad idea since we do want
the transaction logs incase something crashes, we can recreate the DB
from (for example) a week ago's DB backup.

So my question is this: When I shrink it to 2mb (or 200 MB as I am
suggesting) what are we actually "losing" and "keeping" does it keep
the most recent transactions (in which case I need to figure how much
we add each day) or earliest records, or random ones, or are they all
just "compressed?"

I don't weant to lost the transaction logs for the last week or two,
but now that this shrinking has become the holy grail I need to show
there will be bad things happening if I just make these logs all reset
to the size of a floppy disk on a regular basis.