Time Machine to Sparsebundle image on Windows 2012 server

It turns out that when you create a sparse bundle disk image that resides on an APFS volume that it is ALWAYS formatted as APFS even if you specify the the format as HFS+ like this:

I created a few of these (just to be sure) and each one failed as a Time machine Destination.

As @user128998 pointed out in his comment Time Machine relies on a feature of HFS+ to do it's job and will not work on one formatted as APFS.

I had assumed that disk utility was creating an HFS+ formatted sparsebundle because I had selected that option when creating the image, as shown in the screencap above.

In frustration I did a Get Info on the mounted sparseimage bundle and it showed as an APFS volume. Grr... So I deleted it and created another one and was very careful to NOT select APFS.

When I mounted that sparseimage it too showed as an APFS volume.

Opening Disk Utility I selected the mounted sparseimage volume and reformatted it as HFS+. The operation took longer than I expected (3 - 4 minutes) but it was successful. And this time when I ran the command

sudo tmutil setdestination /Volumes/MBAir

It worked!

So maybe I found a bug in Mojave (14.2) with disk images and/or sparsebundles. Or maybe it is expected behavior and I didn't know it, either way this can be marked as solved.