In the System Preferences, you can tell Time Machine what to exclude.
The first backup will take forever, it will be an initial, in place backup of all your files.
Then, every hour it will see what has changed and copy those files over. At the end of every day, it consolidates those down and removes duplicates and if for example you are working on a document, it will back up lots of copies. At the end of the day, it will only keep the original and the latest update.
It does the same at the end of each week, month and then year (at least that is how I have understood it to work)