Time machine isn't really intended to backup to the same disk. Theoretically you would have this machine hooked to a FW external drive or another network drive and the file would be tagged by the operating system to move the file to the external drive at a pre-configured time.
If you look at the write-up on Apple's website it specifies that the default back-up time is at midnight and an external drive is recommended.
Your drive space will be freed up when the backup occurs but at the same time you will have the piece of mind that your file is completely recoverable if need be at a future date.
Yes, I agree that it makes more sense in that particular configuration. But, consider that your average user (the home user that would benefit from this most) is not likely to have external hard drive's plugged into their iMac. The more stuff we pile on our desks, the less Apple's iMac lives-up to the marketing Apple gives it.
I think if someone buys the iMac for the pure elegance (as Apple markets it), then the idea of additional cables and drives is less appealing.
For someone like myself, it just means devoting a drive to hold files that I've already decided I don't want. But, I guess we all have our preferences.