It is my understanding the Time Machine create two types of backups.
They are represented by two different colors on the timeline. One of them is a copy created on the same disk drive as the original data and the other color is on the Time Machine backup disk drive.
The local copie is useful for recovering files lost to human error and the remote copy is useful for longer-term recoveries as well as hardware failures of the local desk. If the removable disk is not available or damaged in someway I believe it still makes the local copies.
Keep in mind that you can plug in a second time machine external disk and it will maintain a completely separate remote copy for you.
In my case I keep two external disks.
I alternate one external disk between my three home computers daily and the other external disk is kept offsite. Every fortnight or so I exchange the local and offsite disks. This maintains a nice reliable backup mostly against human error and the theft/fire of my family's home computers.
In addition to this, I make a CCC backup every month or so that I also keep offsite. Recovering from CCC is much faster than recovering from Time Machine in the case of a hardware disk failure. The CCC backups alternate between three external disk drives that are petition for each of the home computers. The other nice thing about these backups is that they are bootable directly from the external drive.
I keep all these at separate offsite locations some of which are out of state.
So far I haven't lost any data in the last eight years using this mythology. Family photographs are probably the most important data being protected.