how can I use my time capsule in a mesh wifi system -

Of course. The backups will occur over the mesh system, but because the Time Capsule is connected to the mesh router via Ethernet, the mesh router will pass through the backups to the Time Capsule. The same is true on a normal Wi-Fi system.

Another way to say the same thing.......Wi-Fi devices and Ethernet devices are on the same network. It does not matter how they connect. Think of two doors that both open into the same room.

You would use the Time Capsule in a mesh system just like you would use it in a normal Wi-Fi system.

Connect the Time Capsule to the main router using an Ethernet cable. If you don't need the Wi-Fi service of the Time Capsule, you can turn off the Wi-Fi once the Time Capsule is set up.

Post back if you need step-by-step instructions.

Time Machine does not work with iCloud. Time Machine only works if you are backing up to a Time Capsule or other external USB drive that is connected directly to your Mac.