I have an 8TB APFS formatted drive connected via USB to a 2TB Time Capsule. The Time Capsule is not being used as a router, just for Time Machine backups. The Time Capsule is connected via ethernet cable (through a hub) to my MacBook Pro (M1 Max) running Monterey 12.5.
In Time Machine I cannot see the 8TB drive to select it as a backup disk. In the Finder sidebar under Locations I see Time Capsule listed, but the 8TB drive does not appear under Time Capsule. Neither do I see the 8TB drive in AirPort Utility under “Disks” connected to Time Capsule.
Is this a limitation in Monterey? Or is it a limitation of my Time Capsule (version 7.8.1)? If I connect the APFS formatted 8TB drive to my MBP via the hub, I am then able to see it from Time Machine, but I’d prefer to have it connected through Time Capsule so it can be available to other Macs via WiFi (and so that it doesn’t take up a USB port on my hub!)
I tried formatting the 8TB drive as Mac OS Extended (Journaled) and with it again connected to the Time Capsule, I am able to see the drive from Time Machine and to back up to it, but backup is extremely slow - three days already and so far has only backed up 50%.
Here’s an article that speaks to what you are trying to do. It looks like you may do better putting the Time Capsule in bridge mode? There’s more to read than what I am quoting and the author would prefer you were using an Airport Extreme rather than a Time Capsule.
If you do get an AirPort Extreme [or Time Capsule] for network Time Machine, after initial setup, ensure it is in bridge mode (DHCP & NAT networking turned off) and disable wireless networking, so it doesn’t conflict with your existing router and Wi-Fi network … I don’t recommend using any AirPort Extreme as a router because Apple no longer provides security updates for its firmware."
I specifically recommend an AirPort Extreme over a Time Capsule, though you could technically use the latter, too. However, Time Capsules are prone to overheating and component failure, and you might also accidentally back up to the slow, very old drive within. If you do use a Time Capsule, I would still back up to a USB-attached external SSD.
The last Time Capsule model was introduced in mid-2013 - three years before APFS.
Give up on APFS when connected to the Time Capsule.
Use HFS+ on a Time Capsule of APFS when directly attached to the computer.
While I couldn’t quickly official documentation from Apple on it, I strongly suspect (and I’m not the only one) that the Time Capsules internal server firmware just isn’t compatible with APFS. It most likely just can’t read or write APFS and provide it as a network share.