backing up updates as you work: strategy?

I just keep a local copy of my theme.

If I make any changes, and I like them and want to keep them, I redownload that file

If you aren’t changing your theme, no need to keep downloading.

The more important thing is keeping backups of your database

I usually backup my databases and entire home directory weekly through cPanel. That way, if I every accidentally destroy something (which I have occasionally), I won’t have to recreate too much.

Is it normal that the database file is less than 1mb zipped?

Yes.

I backup my site weekly via cPanel, and my server every day via WHM backup tools. I download the backups to my external drive every week.

See also:
https://codex.www.ads-software.com/WordPress_Backups
https://vaultpress.com/
https://pluginbuddy.com/purchase/backupbuddy/

I save my articles locally in a large, living Word document. I don’t back up my site since my host does daily backups for the last 30 days.

It’s a simple time savings vs. risk balance decision for me so I choose not to back up my entire site myself.