Time machine multiple hard disk drives
Yes, Time Machine will backup until it fills the backup disk and then it will start overwriting old backups to make way for new ones.  However, if the volume of data you've told Time Machine to backup exceeds the size of the disk Time Machine is using to save the backups on, it will complain that the disk is too small.  If you have a Time Machine disk which is smaller than the combined size of the hard disks used by your Mac, it's likely you'll need to manually intervene at some stage due to this issue unless you're very diligent about ensuring that you don't ask it to backup too much data.