No - it's a full complete backup of the OS and everything. There are options for exactly what you want to backup etc. The only downside to it is that you actually need an OS installed and rooted with Titanium backup installed to be able to do it - it's not like an iPhone where you can restore the backup through iTunes on your PC. It all has to be done on the phone itself AFAIK.
As for backing up to the SD card - that's true, assuming you don't have an external SD card in the phone as well as the internal SD card. The way I work, I keep all my media on the external SD card so this can be easily swapped between phones. On the SGS2, I know there is a 16Gb model, but is the full 16Gb available for apps installs etc.? BUt yeh, you can just whack in an external SD card and backup to there.
As for the 'full' backup, it is a simple onestep process once you've got root, and getting root isn't THAT tricky. Generally, all you have to do is flash a version of the software already rooted. You'll be able to find one easy enough by perusing the XDA forums, or Modaco, or here even. Like I said, it *IS* a full, complete total backup of whatever you want it to backup. I use it when I try new ROMs - I have a backup of my current ROM, so if I don't like the new one i can restore to exactly where I was, including the specific, customised versions of the OS.
Again though - it's not something that can be done through the desktop machine - it's done on the phone. Unless someone else knows of a way to do it in a similar fashion to iTunes? Theoretically, it shouldn't be that tricky to implement, as it could just be pushed over ADB back to the desktop... </theoretical musings of a non-Android programmer>