The best answer to your question can probably be found in
this Apple Knowledge Base article. Basically it says either Mac OS Extended (Journaled) or Mac OS Extended (Case-Sensitive, Journaled) may be used but the
most common format is Mac OS Extended (Journaled).
Words are one thing, but reality is different. 100% of TM target disks which were "auto-formatted"
by TM itself are case-sensitive.
The experience of users has indicated there are often problems with third party applications when Case-Sensitive is activated because the developers are often not careful with the case in file names resulting in otherwise inexplicable failures.
That's true for boot volumes and certain apps (e.g., Adobe), but the fault there probably lies with the 3rd-parties themselves.
TM has to be prepared for anything. By using case-sensitive for its backup filesystem, it won't screw up the works in the event that the user backs up a case-sensitive source volume.
And I'm still waiting for a response to my query about TM's default formatting of a backup drive.
See previous paragraph.
