There have been several articles written on the subject, but I wanted to capture them all in one place and discuss the Pros and Cons of each method.
1. Time Machine use with XServe or MacMini Server:
First off, if you have any XServer or MacMini server, you can do this very easily and The Apple Blog has a good article on this specifically and some of the pitfalls. One pitfall in particular was the change in OSX 10.6 which caused this functionality not to work properly. The fix is quite simple though:
sudo defaults write com.apple.systempreferences TMShowUnsupportedNetworkVolumes 1
This fix works for pretty much any “unsupported” volume type, including SMB network shares, but IMO SMB isn’t as reliable as AFP.
2. Time Machine with AirPort Extreme or Time Capsule
This is pretty straight forward. If an aiport extreme has USB storage configured properly(see documentation) then it should pretty much just work. See this article from Gizmodo back in 2008. If it’s not working or is somehow flaky, then you can review the fix from #1 above. As for Time Capsule, well, lemme just say it better work. Apple says that’s why it exists, and is really nothing more than Airport Extreme with a built-in HDD and better firmware. Hmm….Time Capsule with a SSD drive, now that would be awesome, though warranty voiding.
3. Time Machine on DIY NAS
Basically, if you need to build a DIY NAS system or say any other router, (Belkin N+ or D-Link DIR-655 maybe?), then as long as the network share is in-fact a read/write type of share, just set the unsupported volumes flag and you should be able to backup with Time Machine to the volume. The last option though, for those of us trying to cobble something together, might be right up your alley, *and* shouldn’t need the unspported volumes flag, but it is more manual.
4. Time Machine on DIY NAS/Network Volumes, with native support!
This option is more about creating an Image to use over the network to emulate a disk and create a network backup scenario. Basically, you can mount the network share, so long as it’s read/write, and then create an image with “Disk Utility” on the NFS, AFP, SMB share, format it HFS+, and mount it then specify it for use with TM. I’ve used this a few times and it does work, but your reliablity is only as good as your network and router setup. If you have a fully fledged NAS device on the network, then this shouldn’t be a problem at all in my opinion.
Good luck and happy backups!