In the current release of TeamPulse, an item is considered to be in the backlog if it not assigned to an iteration (or left assigned to the root Project
iteration). In Agile development, work happens inside of an iteration, so stories that are done should be done as part of that iteration and assigned to an iteration.
I hope that makes this best practice clearer.
We're revisiting Backlog management as part of next release in August. Please stay tuned for upcoming news on the new features in our next release.
the Telerik team