From memory, the backup tarball actually gets saved locally before being copied to the remote location, rather than being by built at the remote location. You need to set the location via the settings. Kodi has limitations in what can be seen in the UI unfortunately, which I recall made either the backup location or restore browsing problematic. The full user folder includes a huge Thumbnails cache folder, that usually represents the bulk of the size and isnt strictly necessary as it can be reconstructed after restore.
Edit: I should also point out that a prerequisite of the in-system-restore of the files is the re-installation of OSMC, but as it’s a simple tarball individual components can be retrieved as needed.