Yes it is a full system backup, but at least the bootloader outside of the filesystem is excluded. However, since RPi uses an actual bootloader within the FAT filesystem, indeed you should be able to downgrade the system successfully with a restore. Although we just recently observed (and luckily found a solution) for a strange issue where a system library used by curl somehow preserved Bullseye ELF headers after the restore: https://dietpi.com/forum/t/upgrade-to-bullseye-apt-upgrade-errors/5736/11
How this is possible needs to be investigated, as dietpi-backup simply does a full rsync, so replaces/syncs every single file and directory.
Do you have a screen or serial cable to check boot messages, when it is failing?