Now that you mentioned that TM also backs up recovery partitions and system files, does it still work so that you can drop this TM image to another different model MacBook (or iMac) just like that? In a same manner as you could use iTunes backup to any iPhone? It is clever enough to exclude unnecessary things when restoring to different machine so that it is not messing up destination machine?
Recovery from a Time Machine backup occurs using Migration Assistant after the main system files have been installed/re-installed, though you can also run Migration Assistant at any time you like (you could run it right now if you wish, just to look at the options it gives you).
Migration Assistant makes it easy to fully restore applications, user accounts and system settings, and it shouldn't overwrite anything unless you tell it to. However it may not be suitable in some cases, for example if you already have the user accounts you want, and just want to copy some files.
In that case you can simply browse a Time Machine disk (from any Mac system) just like you would any other folder structure in the Finder; this lets you locate and copy files and folders just like you would from any other source, though you may need a password to unlock the disk (if it was encrypted) and may need to enter an admin password to copy the data.
I already made my first backup test by doing full TM backup and it wrote about 20GB data on external ssd, it said estimated space needed for backup a little over 30GB, so it was plenty overstated. So I guess even with more data it should be still OK as it will write this over older backups.
Yeah the padding that Time Machine allows can be a bit ridiculous; it's primarily calculated based on how much you're backing up at the time though, so you can trick it a bit when it becomes a problem.
So if you're backing up to a 120gb drive, and need to backup 100gb of data you might find Time Machine's padding prevents it from running, but if you just exclude some stuff so that the first backup is only 80gb then it will run quite happily. Then when you remove those exclusions, you'll only be backing up 20gb of "new" data, with 40gb free.
Time Machine is definitely good for a bundled backup solution, and of course it's very well supported within macOS, but it does have its quirks and annoyances!