This is not true. You have to have either a machine with OS X Server, a Time Capsule or an Airport Extreme with a usb hdd. Using the normal OS X version and filesharing will only show the shares but they won't show up in the Time Machine preferences and thus are not usable as a Time Machine backup volume.
Well, that is, by default

There is a way of enabling Time Machine to use networkshares as it's backup volume. It worked nicely in Leopard but in Snow Leopard some part of it is broken. It's a hidden preference since it's very unstable. If Time Machine fails to backup properly this will result in the complete loss of EVERY backup you made this way. You'll have to start from scratch again. The problem is that this can happen weekly (aka a lot). Highly unrecommended to use this, getting a Time Capsule or Airport Extreme with usb hdd is a lot cheaper and works.
Wake from sleep works in most cases but the problem is getting the machine to sleep again. The new Time Capsules and Airport Extremes hev both abilities. If you use other methods than you're stuck with the wake from sleep option, the sleep option won't be available. This feature works with every services that get's advertised using bonjour. Mind you, your Mac will be woken every now and then to make sure it's still alive and to update the bonjour services list. Great option if you want to share a printer/scanner on the network.