With Time Machine you can go "back in time" to restore files, versions of files, or your entire system. Make sure your backup disk is connected and mounted (if not, Time Machine will alert you that "The storage location for Time Machine backups can't be found" when you open Time Machine).
Restoring specific files or folders
While your backup disk is connected, click the Time Machine icon in the Dock and the Time Machine restore interface appears. You can literally see your windows as they appeared "back in time."
Note: If you use FileVault, you cannot browse for individual items in your Home folder. However, you can restore all files and folders by using the Restore System from Backup feature of the Mac OS X Installer.
You can use the timeline on the right side of the window to reach a certain point back in time (the timeline shows the times of all backups on your backup disk). If you don’t know exactly when you deleted or changed a file, you can use the back arrow to let Time Machine automatically travel through time to show you when that folder last changed.
You can also perform a Spotlight search in the Time Machine Finder Window search field to find a file. Simply type the Spotlight search field and use the back arrow to have Time Machine search through your backups to find what you are looking for.
Before you restore a file, you can also use Quick Look to preview a file to make sure its the one you want. Highlight the file and press the Space Bar to bring up a preview.
To restore, select the file/folder and click the "Restore" button. The file will automatically be copied to the desktop or appropriate folder. If the file you are restoring has another file in the same location with the same name, you will be prompted to choose which file to keep or keep both.
Restoring your entire system from a backup
If you are restoring a backup made by a Mac to the same Mac
If you’ve used Time Machine to back up your computer, you can recover your system’s contents if your system or startup disk becomes damaged.
To recover your entire system:
1) Connect your Time Machine backup disk to your computer.
If you’re restoring your system because of a problem with your startup disk, make sure the disk has been repaired or replaced.
2) Insert your Mac OS X Install disk, and double-click the Install Mac OS X icon.
3) In the Installer, choose Utilities > Restore System from Backup.
4) In the Restore Your System dialog, click Continue.
5) Select your Time Machine backup volume.
6) Select the Time Machine backup you want to restore.
7) Follow the onscreen instructions.
If you are restoring a backup made by one Mac to a completely different Mac
Important: If the backup you are about to restore is from a completely different Mac, use the Migration Assistant to transfer data from the backup
Restoring a Time Machine backup on a new Mac
When you buy a new Mac, you can transfer all of your applications, files, settings, and other information from a Time Machine backup you've already made.
You will be asked if you want to transfer files when you start up your new Mac for the first time. Or, you can use the Migration Assistant (located in Applications/Utilities).