TimeMachine is ment to be a one-for-all solution for backups on Mac. You can backup your entire hard drive (to an external storage, like TimeCapsule device or a USB-drive) and in case of a crash restore your system in an instant. This, however, requires lots of free space on the external drive.
You can also backup only the important folders, then in case of a crash you have to do a reinstall of your system from your installation CD, then restore the backed up folders. This allows you to save some space on the drive you use for backups (hence, you can keep more backups or backup more then one Mac to the same drive).
With some experimentation I found out a few folders that are good to exclude from the backups. The usual ones are:
- ~/Downloads - this is where stuff downloaded from the Internet goes. Usually you can just re-download it when needed.
- ~/Movies - well, I can re-download or re-rip the movies I have as well. Huge space saver.
- ~/.Trash and /.Trashes - who needs a trash backed up? Especially those folders change a lot.
- ~/Applications and /Applications - you can back those up, but also you can just reinstall the apps (especially if you installed them via Mac AppStore).
- /Library/Audio - this is large folder, where I think GarageBand keeps its stuff. I don't use GB, so I don't need it backed up.
- /Library/Caches and ~/Library/Caches - caches. I don't want them backed up and they change often.
- ~/Dropbox - it's where I have my Dropbox files. They're already backed up on Dropbox so, unless you don't trust them, you can exclude them. In case of a crash just resync your new installation.
- ~/Library/Mail Downloads - Mail.app downloads attachments here. You can redownload it, can't you?
- ~/Music/iTunes/iTunes Media/Podcasts - podcasts can be downloaded again in case I'll want to listen to them again.
- /usr, /sbin, /bin, /private/var - system directories, you'll get them with reinstallation of the OSX anyway.
- If you're a Steam user, you can easily exclude the ~/Library/Application Support/Steam folder. With some games in here you can save some gigs of storage. Also it changes after every game...
- /Developer is where the Xcode installation sits. You can redownload Xcode like any other app and reinstall it.
- ~/Library/Application Support/iPhone Simulator - exclude this if you don't need your installed on the simulator apps backed up. I don't.
