"Time Machine Keeps" doesn't make sense - help.

I'm new to Mac.  So forgive me if this is something I'm just way over thinking, but I like to understand stuff and this erks me that I don't understand it.
Time Machine says it keeps:
Hourly backups for the past 24 hours
Daily backups for the past month
Weekly backups for all previous months
What the heck does that mean?
So every hour it back ups whatever has changed on my iMac, right? 
Does it also take a daily snapshot and keep those for a month?
Beyond that what is a weekly backup?  Is it all the changes I made in a month?
And what really freaks me out is lets say I'm an ametur photographer (oh wait, I am )...... I store pictures on my hard drive, and they get backed up on Time Machine.  I don't touch them for over a year or so, and my Time Capsule fills up.  Does that mean that because "the oldest backups are deleted when your disk becomes full" that those old files that haven't been touched in hours, days, or weeks, are the first backed up file to go?
Hoping someone can explain this to me in layman's terms, or with really good analogies. 
Appreciate your time.

Read the expert Pondini on how TM works.
http://pondini.org/TM/Works.html
There is a bunch of links on that page to some more technical discussion of what is happening.
This FAQ explains a bit more clearly the hourly, weekly and monthly stuff.
So every hour it back ups whatever has changed on my iMac, right?
Yes.
Does it also take a daily snapshot and keep those for a month?
Yes. The Daily is the first backup of the day.
This is how pondini explains it.
Time Machine automatically "thins" (deletes) backups every time it does a new backup, as shown on the Preference window:
•"Hourly" backups after 24 hours (except the first of the day, which is a "Daily" backup).
So after one day, all the variations on your files are deleted. If you want to recover to version you made a few hours ago it will have to be done on that day.
•"Daily" backups after a month (except the first of each week, which is a "Weekly" backup.)
So you can restore any version of your file, that is part of the first backup of each day for one month.
•"Weekly" backups are kept until Time Machine needs the space for new backups; then one or more of the oldest weeklies will be deleted.
You can restore files saved on the first day of each week, for as long as the backup device has room.
However, Time Machine will never delete the backup copy of anything that was on the disk being backed-up at the time of any remaining backup.  So all that's actually deleted are copies of items whose originals were changed or deleted before the next remaining backup.  If that seems odd, it is!  See  How Time Machine works its Magic  for details.
Honestly even having studied this stuff for a while .. I have no idea what the red bit means.
What is kept long term is Weekly backups. That is the backup of the first day of the week.
When space runs out the Weekly backups will be deleted from the oldest onwards.
But note that anytime you delete a file, that file will also be deleted from the TM backup at some unpredictable time in the future along with all the versions of the file.
The TM backup in the end is supposed to be able to recreate the computer as it is, right now. And to give you some history of file changes for as long as space is available. It is really not supposed to work as an archive of files. Do not expect to find every version of your files or especially files you have deleted on the computer to remain permanently in the TM backup.
Do use clones.. a clone gives you a proper archive of the computer.. make and keep clones and you will be able to recover even files you delete.
See pondini comparison of clones and TM.
http://pondini.org/TM/Clones.html

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