What if I turn off backups for Netflix? What do I lose

Backups don't store the actual apps, just data generated by the apps. When you restore the apps are re-downloaded from the App Store.

Netflix probably stores everything (your favorites etc.) on their servers, so you won't lose anything.

To be honest, you don't really need to. I don't backup Netflix. When I get a new device, I simply download the app again and login.