My understanding is the very first backup made is a full system backup. Then, every hour afterwards only updates are backed up. At some point, TM processes all the day's hourly backups and creates a single day's backup. When TM needs more space, the older dated backups are removed but all current dates are retained.
For example, let's say a TM backup disk has backups from 9/1/18 thru 9/9/19. The backup disk is suddenly running out of space so during the next backup, TM makes room by removing backups from 9/1/18 thru 11/30/18. If a user wanted to restore a file in that time frame, the data is gone. The user can only restore files/folders/system from 12/1/18 thru 9/9/19. Hope this makes sense.