Yes there are large files but I think they are split to 4GB so not exactly one big file. I had a feeling the blob concept might make you uneasy but for what Crashplan does with history and versions it's really not feasible to have a direct copy of your folder structure.

15 minutes is not counter productive. It keeps *every* copy it takes every 15 minutes so you can restore any of the backups depending on how far you want to go back. That's what the screenshot you took shows by default except you've changed it to daily. As they get older, it goes down the list when pruning the backups i.e. the 15 minute backups only last for the current week. Then it just keeps daily copies from the week before, then weekly copies from the last 3 months and so on..

Your changes will result in smaller size of your backup sets, but will result in less "coverage" and also completely removing a deleted file after a month. e.g. if you edited a file all day and screwed it up late in the afternoon, your whole day's work would be lost as the most recent backup would be up to 24 hours old. If you had 15 minute backups you could go back in 15 minute steps (for the whole week by default). Covering your screwups I think you might want frequent backups and if you want to keep the size down, just set the additional versions as appropriate.

Further to this the 15 minute thing by default only keeps 1 week of 15 minute backups. AFter that it keeps one per day for 3 months, then once per week for the last year and then once a month forever. So it's not keeping 15 minute copies forever.

Note also it will not backup the file unless it changed so every 15 minutes it's likely to only backup a few files. Note also you have to save for it to backup i.e. keeping you spreadsheet open but not saving it for hours won't work.

Also, with your settings, if a file goes missing by being moved or deleted and you realise over a month later, you can't get that file back. That's why that last setting defaults to "never".

It's fine to use them as long as you understand the impact of having less frequent copies of your data. That's basically what those settings do - thin out the older versions so you can have history going a long long way back but not keep every 15 minute copy. Most backup systems have this concept.

You can "force" a backup by pressing play on the backup set (it should keep track of changed files) or doing a file rescan.

So yes when you restore, you can restore a snapshot based on time OR if just one particular file you can browse the tree and underneath each file will be each copy that's been taken and you can pick the one you want.

Your questions
1) If your system dies, you need to get it up and running outside of Crashplan as it doesn't do bare metal recovery as noted. Other tools can do system images allowing a full restore. As I said, I probably end up doing a reinstall anyway to remove some of the cruft I end up with. So recover to a working OS, install Crashplan. I think you might have to login and then under destinations just select the backup location as you did when you started and it should just read the backup set from your drive

2) Yes if your system goes to sleep there's not much Crashplan or any other backup can do about that. It will pickup after resuming though. Only issue might be that noted by Andy above where really huge files don't get a chance to finish so have to keep restarting. I've seen something like that happening but Crashplan backing up to their cloud (i.e. paid service) does appear to be able to resume backups. If the file keeps changing though that might be problem.

I leave machines on all the time so the sleep thing probably never hurts me but I would be confident in just letting Crashplan do its thing. For your first backup if it's terabytes of data then yes I would turn off power saving to get a proper start.

HTH