According to some other forum posts, $OF holds files whose pathname is too long to be stored on your backup device. My guess is that "OF" stands for "OverFlow".
File History tries to do a "mirror" copy of your user files and folders, preserving directory and file names. Windows has a 255-character limit on all pathnames, though, and File History adds a longish timestamp to all filenames when it makes its copy, so if you have a file near the name length limit, Windows will have to save it to a different name when it makes the copy. Also, if you back up to a network drive, Windows has to prepend the server and share names to each filename to build the UNC path, so the apparent length cutoff may end up being much less than 255 characters. If you've got long directory names or deep trees, it could be that a lot of your files end up in $OF.
See:
http://superuser.com/a/701883/399577
(edit: make links clickable)