Using a Time Capsule for Time Machine backups and as a data drive

Yes, you can use your time capsule as a drive for data. If you create a disk image, you reserve a certain amount of space for that image. Time Machine will respect that space and leave the disk image alone even if there is a large amount of unused space on the image.

If you create a folder, it starts with zero space until you add data to it. The folder can be as large as you would like as long as the space is available on the TC.

So, each has an advantage. The disk image will reserve the space until you fill it up and the folder will not. But, the folder can be as large as you would like as long as the TC has space available.

Your next question might be can you change the size of a disk image after it has been created? I haven't tried this, but think you probably could.

For most users, I think the folder concept is probably simpler for them to use and easier to understand. But more advanced users may favor the disk image concept if they feel that space will be at a premium on the disk.

Great! Glad I could help :) make sure you mark this question as answered if it was helpful.