Only files are checked, not folders. Therefore, any volume or hard drive listed as part of the backup DOMAIN in your options or preferences file will have all of the folders in its directory structure backed up, even if the files in those directories are excluded using simple exclude statements.

One file at a time is processed through the include/exclude rules from the bottom of the list to the top until a filename match is found. If a match is found, the processing stops and determines whether the action is to include or exclude. In the case of an include, the file is sent to be backed up. In the case of an exclude, the file is not sent for backup. Any subsequent matches in include or exclude statements will be ignored since the processing of the file ends at the point that a filename match is established. The process repeats for each file in the domain.

If a file doesn’t match any include/exclude rule, it’s implicitly included and therefore backed up.

Exclude.dir cannot be overridden.