Backing up Microsoft365 Outlook files

... Does this mean that my Calendar files are being backed up by Time Machine. If my Outlook Calendar gets messed up can I simply restore the folders/files in the path below Calendar to my HD to recover the calendar?

I believe so, with the caveat that I do not use MSFT products so I cannot be completely certain. To be certain, you will need to confirm this on your own.

The Microsoft literature on 365 that I have found gave me no insight into the answer to this question.

I don't doubt it. MSFT has always had their own way of doing things, and utterly disregards "the Apple way" to their detriment.

To answer your overall question though, TM backs up everything that was on your Mac at the time TM ran — everything other than macOS itself. "Everything" also includes files stored in iCloud, provided that sufficient space exists on your Mac to retain a local copy.

• If in doubt, a file with a "cloud" icon adjacent to it in the Finder is not stored locally. A folder containing an item not stored locally will also have a "cloud" icon adjacent to it.

So it stands to reason that if you want to restore something MSFT has buried in locations known only to it, then restoring the encompassing folder ought to restore it. Since I don't use MSFT bloatware any more, it's up to you to put that theory to the test.

The ultimate "restore" would be to restore everything according to Restore your Mac from a backup - Apple Support. Doing that would obviate any question regarding related files that may be needed.

TM backs up everything on your drive, so your locally stored Calendar is also backed up. Whether or not you could restore the Calendar by itself, however, is another matter. Outlook stores all its data in this folder on your local drive: /Users/username/Library/Group Containers/UBF8T346G9.Office/Outlook/Outlook 15 Profiles but it is not designed to be worked on manually.

If I were to manually back up my Office 365 implementation I would back up the entirety of all folders beginning with: /Users/username/Library/Group Containers/UBF8T346G9/ There are multiple folders whose names begin with this string.

That said, you can export an archive of your Outlook Calendar using this method: Export items to an archive file in Outlook for Mac