What is the purpose the home folder

The only real use I've found on a NAS, is FTP (there may be other reasons, but that is all I have found). Since I've not used FTP in a pretty good while, I don't bother with Home directories anymore.

Home folders is where you can store your personal files and settings. This can be local per computer or centrally for the whole network. Or not at all. It is a special share that is unique to the username. Typically /home/username.

The user root always get a home folder in /root.

In big networks with many users it is common that users get their own central home folder /home/username mounted over the network the same regardless what computer they log in to. Then the computer they happen to use this time will behave like they are used to, and they can access the files they created earlier on some other computer.

Some software assume that you use home folders and store their settings, documents and other stuff there. If you only use the user root in OMV then it will use /root. This can be settings for bash and other shell environments. Command line terminal.

In a small home network with personal computers the home folders are typically not on the network server but locally on each pc. This is especially important for a laptop that you often use away from the network. But it also means that backups of the OMV server doesn't backup the files on the PC/laptop. You need to fix the backups of the local home folders some other way.

If you work on the OMV server on the command line, over SSH or the terminal, as some other user than root, then you need a home folder for that user in order to get the shell environment working properly with history and completion and so on. Also utilities like mc (Midnight Commander) use the home folder to store settings.

I use my OMV servers quite a bit logged in remotely as a user other than root. I have even disabled remote login for the user root. I run and maintain scripts for backups, for instance. Or do major reorganization using mc. Or update compressed archives. Or... So I have created home folders. But I didn't use OMV to do it, I did it using a script.

No. Don't backup a home folder on one computer to a home folder on another. There may be many settings in hidden files and folders that will be overwritten and this could totally bork your user settings.

Backup (or sync) your home folder to a share with space for backups on the nas.