I think I can explain it.. partially at least.
There is a major transition going on.. your profile shows Sierra.. is that correct or is it already High Sierra.. ??
Apple moved a lot of network protocol to SMB way back in Yosemite or Mavericks..
From High Sierra.. it will now support Time Machine backup over SMB... only not to Time Capsule which is old tech and did not upgrade from SMB1.. which does NOT support Time Machine.. it only can use AFP.
In order to replicate your situation.. I put a Time Capsule online.. (older OS though and Gen4 TC).
I then mounted the disks in finder.. first one just as it appears in Finder.. and secondly I deliberately forced it to mount using Go, Connect to Server .. using IP address.
Both 10.0.1.1 and TCgen4b are identical .. the Time Capsule.

So I have simultaneously achieved this.

The top one is mounted AFP.. The bottom one is SMB.
They show icons as you see them.


Exactly as corresponds to the protocol being used.
You can see the server type on left is smb and corresponds to your pic of a computer on the network..
And the one on the right is connected by afp and the Mac understands this to be a Time Capsule..
Also look at the disk format.. on the left is FAT (SMB1 = Microsoft NT server).. and AFP is Appleshare on the right.
Time Machine can only use HFS+ format drive so neither is strictly correct.. the format of the drive is hidden by the network.

While the disk is mounted SMB it will not work for Time Machine.. it must be mounted AFP.. however that should not be dependent on what you do.. as TM itself will mount the disk.
It is part of the whole problem of time machine being very unreliable since Sierra .. particularly on High Sierra.
There are a number of things you can do to help the problem.. but no clear and simple solution.
Backups to local disk are not dependent on network protocols and much more reliable. So my rule of thumb now is Time Machine for local backup.. USB drive.. Use alternative like Carbon Copy Cloner for network drive.. much more reliable.
However you can force mount the TC AFP via go, connect to server.. and use this option in Time Machine.. this is messy as you will need to script it to mount everytime you restart the computer. Otherwise you will be forced to continually mount the disk manually.