The iCloud icon is showing you files that are synced with iCloud (these are usually documents and desktop folders, and can be toggled in iCloud's iCloud Drive option—but be careful with that thing, since turning it off could kill those files on the Mac*). iCloud is not "backing up" your Mac, but syncing with it, although this could be considered "backup" since a copy of that file is now on the cloud.
If you are using Time Machine, it is backing up your Mac and all of its settings (including iCloud settings), but it is not backing up anything on iCloud.
*I don't use iCloud Drive because of this. It's cryptic as hell, and if you turn it off you lose whatever was "on the Mac", because technically it's not. Or something. It actually is, but the file location is hidden and not so fun to get at—or understand, or recover, or anything else useful.
- AppleNova is the best Mac-users forum on the internet. We are smart, educated, capable, and helpful. We are also loaded with smart-alecks! :)
- Blessed are the peacemakers, for they shall be called sons of God. (Mat 5:9)