Appletax
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As I do not use Store Apps, I can't speak to those. It definitely backs up installed apps (or all the ones I had) including M365.
When I did the last N&P on a desktop I have, and restored from its backup, literally everything came back, down to the Personalization choices I had made.
The proviso is that this is directly linked not only to having sufficient cloud storage to make it happen, but it has to be OneDrive cloud storage. For the vast majority of M365 users in the residential world, that's not a problem. Very few of my clients (and even myself) come close to using 1 TB of storage space, period, but very very rarely indeed for "active content." Inactive content is another thing altogether and is best stored on archival media such as backup drives (with more than one copy of it, too).
I just realized that I have this feature turned on, but it does not add any additional size to my OneDrive.
This post says that it remembers your Microsoft Store apps.
This post from Microsoft says the same.
Given this, it leads me to believe that the restoration process on a fresh install will simply initiate downloads for all your Microsoft Store apps and install them.
If it does restore all apps, then why doesn't it take up extra space and why don't I see any info online talking about how it can backup all your apps outside of the Microsoft Store?