mach_kernel being visible was an anomaly that I thought Apple addressed with a subsequent update. Don't erase it, but if you want to make it invisible that's easily accomplished with the following:
Open Terminal - it's in your Mac's Utilities folder.
Copy and paste the following in the Terminal window, followed by the Return key:
sudo chflags hidden /mach_kernel
It will ask for your password. Type it and press Return. What you type will not be echoed, not even with ••••••• characters. That will make mach_kernel invisible, as it should be.
Quit Terminal when you're finished with it.
Should I be shutting off my Wifi and/or whole MacBook at night?
It's not necessary to do either one. Macs are designed to be ignored when you're not using them. They literally work best when treated with benign neglect. If you're not using it, just walk away. Close the lid if you feel like it. OS X's default energy saver settings will result in negligible power consumption in sleep mode.
-- is there a specific way I should now set up Time Machine or just plug it in when I'm ready to back it up?
Not really, once you format a Time Machine disk using Disk Utility, it's best to leave Time Machine alone to work as designed. If the disk is unplugged or not available, Time Machine will create "local snapshots" using your MacBook's internal storage that are written to the Time Machine backup disk when it becomes available. If local storage requirements for them becomes excessive, it stops doing that. If a long period of time passes without your Mac being backed up (ten days, I believe) Time Machine will tell you. The same happens if the Time Machine backup device runs out of space.
It's another manifestation of Apple's benign neglect philosophy. Just plug in the Time Machine backup disk when you are ready to back up, when it's convenient for you.
About the only thing you can do to improve upon Time Machine is to have two or more redundant backup drives. Time Machine will back up to as many backup devices as you have, in sequence. If one device is not available, it looks for the next one, etc. It does that every hour, as long as the MacBook's power adapter is connected.