.xbmc folder holds all your information it's where all the add-ons repos are stored. this is the folder the openelec backup tool backs up
Userdata folder which is inside the .xbmc folder holds all your personal settings:
Keymaps, advanced settings/ it also has a addons folder inside but in here it only stores personal settings for each add-on like passwords and add-on settings.
If you want to backup your system copy the .xbmc folder in its entirety
But.......
If your giving your backup to someone else you may want to delete, some or all of the content of the userdata/addon folder as you don't want to give your ustvnow account or furk passwords away.
Also....
This isn't always applicable and doesn't get backed up by the openelec backup tool however, If you have updated you librtmp using tuxens method, or you have any other autostart script running you will also need to backup the "/storage/.config" folder and the "/storage/lib" folder which will only be there if you updated your librtmp.
I must say though I think your find it takes longer this way, but try it for yourself.