First, you can read the Apple's support site related to Time Machine > http://support.apple.com/kb/HT1427
Then, see the Pondini's site > http://pondini.org/TM/Works.html
Basically, Time Machine makes automatic backups of your Mac onto an external drive. The first time you run Time Machine, it will make a full backup of the hard drive, and the next backups will be incremental, just backing up the files modified since the last created backup
I have a new version 2 TB Time Capsule which I have set up to do Time Machine backups of two iMacs. The first backup is complete and done through WiFi, the second is larger so I have hooked up to the Time Capsule with an ethernet cord.
1. After hooking up the ethernet connection I was not sure whether the data was being sent via WiFi or through ethernet. I turned off WiFi on my computer and it appeared that the back up did not stop. Do the computer and Time Capsule automatically select the ethernet connection over WiFi since it is the faster and more stable of the two methods?
2. If you are in the middle of the first Time Capsule backup and stop the process, does that delete everything done up to that point. When you restart the back up are you starting at the beginning or do the devices remember where to pick up?
3. What does the "Stop BackUp" in the Time Maching menu do? Does the process restart automatically?