All about TIME MACHINE
This is much too large a topic for a single User Tip.
For a general overview and demonstration, see Apple's Time Machine Tutorial
For the gory details, see the following web pages:
Time Machine - Frequently Asked Questions
Time Machine - Troubleshooting
Using Time Machine with a Time Capsule
Using Time Machine with an Airport Extreme Air Disk
Other Time Machine information:
How Time Machine works its Magic (overview of internal "works")
Time Machine vs. Clones and Archives (overview of different types of backup apps)