Not all files are backed up by Time Machine, but most files are backed up by Time Machine. There's a user-level exclusion list and a built-in exclusion list. The built-in exclusion list excludes things that are non-essential for restoring a system like log files and what not.
Apps can also exclude their own data from Time Machine by marking files with meta-data tags to exclude them from backups. For example: a web browser may chose to mark its cache directories as excluded from the Time Machine backups because cached surfing data isn't essential to a restore.
There's already a great Q&A on Ask Different that deals with how you see the exclusions list in Time Machine to see what's in the back and what isn't. It was asked and written for Lion, but it applies to anything Lion and post-Lion so far, including Mavericks. That includes details on how to see the built-in list as well as which apps have excluded data from the backups.
In short: don't panic if your first backup isn't the same size as all used space on your hard drive. It wasn't meant to be.