Is TimeMachine Apple's System Restore? I have recently moved to Mac from Windows. Rarely I find that I may have to use System Restore to fix an issue that the OS has incurred. What I would like to know is whether Time Machine is the Mac equivalent to this feature?

I do not need Time Machine file backups itself as I already make regular backups using rsync. But if Time Machine can also backup the OS will use it.
Yes, TimeMachine is Apple's way of doing backups (both user, and whole system, as long as you aren't excluding system files).

http://support.apple.com/kb/ht1427