It keeps 100 unused keys. So every time you use one it will generate another one. You should back it up frequently.
You don't need to back it up frequently.
I suppose that depends on how many transactions you are sending, how many receiving addresses you are generating, and what you mean when you say "frequently".
You only need to back it up as often as every 100 keys. One key is used every time you send bitcoins and one is used every time you allocate a new key to receive bitcoins.
While this is technically true, I tend to be concerned about the possibility that the most recent backup is unusable (for example, backing up a corrupted file before realizing that it is corrupted).
Instead, I prefer to back up every 25 keys, and keep the 3 most recent backups. If you use a new address for every transaction (like you should), and you average 4 transactions per day, then backing up weekly would make sense. Some people might use the word "frequent" to describe weekly backups.
