Time Machine is recording *diminishing* amounts of bytes Many issues are concerned with insufficient storage for Time Machine's disk. Mine is the opposite, it would seem that available storage is ignored.

MacBook Pro: 15-inch 2018
Memory: 16GB 2400MHz DDR4
MacOS Big Sur Version 11.1
Time Machine disk: Seagate Backup Plus Drive, 8TB
Time Machine works correctly. I can explore material back to 2016.
Encryption: I started it this week. It's at 18%. I recognize that
it's a slow process.
Automatic backup is turned off in order not to delay encryption.

Yes; backup not an archive -- but I like sometimes to be able to explore ancient material.
Using info last night I saw 940,570,304,512 bytes used; call it 940,570 MB. I did a (manual) backup. The amount used diminished to 939,733 MB. A succession of further checks showed 939,800 ... 939,816 ... 939,818 ... so increasing ... 939,906 ... 939,908 MB. I shut the machine down. This morning, upon start-up, that figure is reduced; it's now 939,760.
It's as if a limit of 1TB is somehow set -- yet I have an 8TB drive.

Has such a limit been set somewhere?
If so, where?
How can I see it?
How can I reset it?
Time Machine compresses backups based on a regular schedule. Ultimately you will end up with weekly backups. This occurs regardless of your free storage space.
When you run out of space, it will start deleting whatever backups you have, oldest first, until you have enough space to complete a new one.