Why does my 1TB time machine disk store so little history when I have only 250GB of data?

Apple recommends a backup disk with at least twice the storage capacity of the source Mac. In your case that would be at least 2 TB.

If Time Machine on your Mac recommends a larger backup disk - Apple Support

2 TB will convey the ability to store an absolute minimum of one and only one complete, restorable backup of your source Mac's contents. If it is storing two months worth of backups you're doing quite well. Theoretically, and in an extreme, unlikely example, a single incremental macOS update or upgrade or other sufficiently large change to the source volume's contents may reduce that to a single day with no warning.

Time Machine backs up everything not explicitly excluded (the exclusions you provided), and there is a significant amount of storage "overhead" required for it to work. That amount is a function of the aggregate number of files needed to be backed up, the number and recency of changes to them, and is not easily calculated. Time Machine itself makes an initial estimate before it will even begin. It will revise that estimate if it determines a backup could not be completed due to insufficient space, after which it will go about deleting old and "expired" backups, and then it finally begins. Once it finishes it again deletes old and "expired" backups, and then it remains silent until the next scheduled backup.

To keep things in perspective consider the fact a 2 TB HD costs only a few dollars more than a 1 TB drive. A 5 TB or even 6 TB drive costs about twice as much. Five times the storage for 2x the cost. Get a few of them and keep at least one geographically distant from all the others at all times.

There is no limit to the number of backup disks for TM. If one fails, throw it away. Replace it whenever it's convenient. As long as it's encrypted its data are utterly useless to anyone without the encryption password.

But it is sufficient — according to Apple, and even according to you. Even with a 1 TB backup drive you have the luxury of scrolling through two months of backups, from which you can choose an entire system to restore as of that time, day, or week (depending on how far back you go). That's astonishing.

Bear in mind "sufficient" is defined as one complete, restorable backup of the source volume's contents. Apple doesn't guarantee anything more than that.

The reason is that TM backs up everything including data not accessible to the user — temporary files and other data dynamically managed by the system. macOS releases that purgeable storage on its own schedule (typically a day). If you find yourself running low on internal storage to the point you are unable to download a large file or install a significant macOS update or upgrade for example, waiting a day or so is usually adequate.

The reason it does that is so you can effectively use TM to create a duplicate of the source Mac at the time it was backed up, should it become lost, stolen, or broken. Nothing needs to be rebuilt, updated, downloaded, changed, etc.

It gets better: Should you ever find yourself in dire need to recover from some disaster you can restore a "local snapshot" from the startup volume itself. That takes about two minutes, start to finish, provided you take advantage of that opportunity right away because older "local snapshots" are constantly being replaced by newer ones.

In what should now be considered the distant past, your expectations would be reasonable. It is no longer so. macOS maximizes utilization of the entirety of its resources — including storage.

The bottom line is that 1 TB is about the minimum practicable Time Machine backup drive these days, given the fact the most modestly equipped Mac has 256 GB storage... an exiguous amount for practical use.

BTW - I never mentioned the word "insufficient" in my original post -

I realize that now.

I suspect AI is responsible for retitling posts, and yes, I was also misled by it. Most of the time it's useful, when the title is vague for example, but sometimes retitling a post has the opposite effect. This Discussion is a prime example of the latter.

In any event I have no reason to suspect TM is doing anything unexpected. If you remain curious I'd get an additional backup drive or two, add them to TM, and give them a few months to work. Then, erase the 1 TB drive, start a new set of backups for it, and compare.

Those characteristics certainly appear to be consistent with AI.

If I am though, how would I know?