How do I find out what my time capsule is doing?
From Time Capsule 802.11n (4th Generation) - Setup Guide:

If Your Time Capsule Status Light Flashes Amber

[..]

For more information about why the light is flashing, open AirPort Utility, select your
Time Capsule, and then choose Manual Setup from the Base Station menu. Click Base
Station Status to display information about the flashing light.

You can also select “Monitor base station for problems” in AirPort preferences.
If the base station has a problem, AirPort Utility opens and walks you through
solving the problem.