The mechanics of Time Machine are pretty simple. I would recommend starting with restoring a folder with two files in it on your desktop to avoid the delays with restoring something like Xcode for your first attempt. Waiting for 5 GB or more to restore or even delete is a poor way to get feedback if you are trying to learn how to use the function.
- Make your test data and back up manually by adding Time Machine to your menu bar.
- After getting two backups with the folder (name it something searchable like
3821F8D0-E590-4AD5-95A3-7826E1484887 or use
uuidgen to make a unique-ish name. Spotlight will help you locate things in Finder as well as in Time Machine
- Delete the original folder off your desktop. (this avoids getting a prompt to replace the folder/file - so once you're ready, you'd delete /Applications/Xcode and then go to your backup to restore it)
- Enter Time Machine and search for the folder name in spotlight.
- Locate the time interval of your choice and select the folder
- Click restore
It will be restored to the original location and you won't be prompted unless there is an existing version of the file/folder. Keep in mind, when you restore a folder on OS X, the behavior is almost always to delete the old folder and everything it contains and then replace it with the copy.