Does CWM backup everything? Or just the actual system? I have just created a backup using CWM. A 3.2G backup of a clean factory reset. Mental.

I am wondering that once I have installed all the apps, and make a new backup....that backup will contain EVERYTHING? Apps, photos, music...and so on?
A backup created via recovery is a nandroid backup.

Yes, the nandroid backup created by any recovery (CWM, TWRP) will be exact replica of the phone state when the backup was taken- that means it'll have all the files/ data that you have on the phone.

Here is a good article about nandroid backups