What does "Exclude these items from backup" mean in Time Machine

Time Machine automatically excludes any internally or externally connected back up disk from being backed up, so B&C, being backup disks are not included to be backed up.

Are you rotating Time Machine backups across all three disks? Wise to have more than one backup but you might consider reducing the rotation to two disks and using the third to make a bootable clone of your system. Another thing to think about having three backups is taking one of them off site. If something happened to your home/office you could lose your system and all of it’s backups at once. Removing one of them significantly reduces the chances of that.

http://oldtoad.net/pondini.org/TM/27.html

You’re very welcome. The site I linked to is a treasure trove of information, a bit dated, but much of it is still relevant. You can find almost any answer regarding Time Machine there.