Hey marr2012,
Thanks for the question. I understand you have some questions about Time Machine. The following resource has some great information:
Mac Basics: Time Machine backs up your Mac
http://support.apple.com/kb/ht1427
Time Machine is the built-in backup feature of OS X that works with your Mac and an external drive (sold separately) or AirPort Time Capsule. Connect the drive, tell Time Machine to use it, and relax. Time Machine automatically backs up your entire Mac, including system files, applications, accounts, preferences, email messages, music, photos, movies, and documents. But what makes Time Machine different from other backup applications is that it not only keeps a spare copy of every file, it remembers how your system looked on any given day—so you can revisit your Mac as it appeared in the past. Time Machine keeps hourly backups for the past 24 hours, daily backups for the past month, and weekly backups until your backup drive is full.
Thanks,
Matt M.