Is Time Machine more like System Restore or Norton Ghost?
Neither.
http://www.apple.com/macosx/features/timemachine.html
System Restore just keeps around important system files and only makes a backup every so often.
Norton Ghost makes an entire drive backup whenever you have it set to run.
Time Machine even keeps the incremental backups in between. So lets say I open file test.txt, I write some text and save it.
Time Machine backs it up.
I open test.txt a week later, and I remove some lines of text, add a few others.
Time Machine backs it up
Now, I go in to edit a third time, another week later and notice I accidently removed a few lines of text I did not want to remove.
I go to Finder, click Time Machine, and scroll back to 3 weeks ago, I grab the file, and copy it to my hard drive. I can now look at what I saved 3 weeks ago, and grab what I need.
Time Machine does incremental backups. I can restore to any previous state that it has backed up. Now, if my main hard drive dies, I can pop in the Leopard install DVD, tell it to re-install and grab all my data from the TimeMachine backup.
I reboot after the re-install, and presto my machine is ready to go, and EVERY single file is back where it was when the last backup was done. Even custom configurations, custom programs and whatnot, all of them placed where they belong.