Simple question - should I be backing up my IMac to the computer or iCloud?
iCloud will not back up your Mac, use Time Machine for that.
Sorry, I use that...talking about iTunes - when I back up should it be to iCloud or my Mac?
You can not backup to iCloud, not from your Mac (iCloud backup is for IOS devices). Backing up to your Mac is not a backup, it needs to be on a separate drive (for obvious reasons). Get an external drive and use Time Machine.
Ooops, you already got that.
Retrieving data ...