An application can "register" with the backup system to backup its configuration files.

The applications aren't backed up for very very good technical reasons: there's no guarantee they'll work on the new image (it might not be a point release, but a major upgrade)

The application catalogue isn't backed up for reasonable technical reasons: there's no guarantee that post-upgrade the catalogue will contain applications you can run on the new OS. This is more debatable, and there are a few technical solutions here.

HTH,

Andrew