Up until Big Sur, Time Machine backs up everything on your Mac by default, including the operating system. With Big Sur, everything is backed up except the operating system.
Apple's thinking with Time Machine assumes the following worst case scenario:
Your Mac's hard drive fails and you need to get a new hard drive installed on the Mac. In effect, you have a "new" Mac. If you have a Time Machine backup, you can transfer everything on a recent backup or the latest back up using Migration Assistant over to the newly repaired Mac and your "new" Mac will look just like your "old" Mac.
If you want to Exclude items from being backed up.......
Open System Preferences.......the gear icon on the dock
Open Time Machine
Click on Options
Here you will see a list of items that are Excluded from backups. If you want to add additional items to be Excluded from Time Machine backups, click on the + (plus) button at the bottom of the list and use the Finder interface to navigate and Choose the file(s) that you want to Exclude. When you do this, the file(s) will now appear on the list of Excluded items.
Frankly, the less that you Exclude, the easier things will be, but it's your call.