Isn't that the point?
From my understanding, TM will make an initial "image" of your entire hard drive (minus what you excluded). Every hour it will search for any files that were changed and make a separate backup of just those files that were changed. At the end of the day, it will combine all the changes into one "backup" for that day. It continues to do this for 30 days, then starts combining weeks. Obviously hard drives have a finite amount of space so when it's full, it deletes the oldest backup file which will either be a week backup or a day backup.
I just started using TM today though on a 100gb partition (WD External 160GB drive) for my Macbook Pro. I just want at least a backup for the past few days incase my hard drive goes south.
You'd think that's how it'd work...
It should delete older backups but...
from Apple time machine support:
(http://docs.info.apple.com/article.html?path=Mac/10.5/en/15137.html)
"If you do run out of space, the best thing to do is to attach a new backup disk. After you attach the new disk, open Time Machine preferences and click Change Disk to choose it as your Time Machine backup disk."
That has got to be the stupidest thing I've ever read.
It's obvious TM needs major work, but at least they're going in the right direction I guess. That said, I would never trust any program to back up anything important to me. Call me paranoid, but wondering whether or not things got backed up properly should never be a question.