Philo's answer is spot on, and I'll basically be rephrasing it here into a form that makes more sense to me. Hopefully it will help some others as well.
Rather than only dialing back the clock 1B years, let's go waaaay back and see what things look like: we go back 13.82B years and look out into space... And there's no space! The universe is very (infinitely?) dense and everywhere you look there's basically just energy. Depending on the exact timing, there may or may not even be subatomic particles yet, but it doesn't matter: even in the later stretches of the very beginning, the whole universe is like the interior of a star, so dense that photons leaving one emitter are pretty much immediately absorbed by something else. It's like this for the first 380k years or so. The universe is expanding this whole time though, so the overall temperature is dropping.
Finally the universe expands enough that when a photon is emitted, it has time to go somewhere before it hits something else, and on the flips side of that coin, atomic matter can start to form because its not being constantly plasma-ized by photons. So fairly suddenly, the universe goes from being hot and opaque to being slightly less hot and transparent. All those same photons as before are flying around, but as I said, they now travel pretty freely.
So out the window of your time machine you see a cloud of suddenly free photons rushing off to hit whatever eyeball is nearest, a.k.a. yours; and because the speed of light is finite, you see photons sequentially in time based on how far away from you they were emitted. So the first ones you see are from just outside your window, and then the ones behind those, and the ones behind those... You see a receding "surface" of glowing plasma, because you can only see it as quickly as the photons reach you. You can also see the new matter now, but also only as fast as the light scattering off of it can reach you.
So as time progresses, two things are apparent:
1. You can see farther and farther into the presumably infinite universe - that is, your observable universe is growing larger at the speed of light.
2. Since the light takes time to reach you, the things you see happening "at the edge" are the things that were happening right as the universe became transparent. Meaning there's a direct correlation between how far away you can see and how long ago you can see. Time and distance become interchangeable, in a way, related to each other by the speed of light. Which makes sense, since a "speed" is a ratio of time and distance.
Now there's one little adjustment that must be mentioned, and that is that space itself is still expanding. So things that happened x many millions or billions of years ago look more than x million/billion light years away, even though light still only traveled light speed to get here from there. That doesn't change the fact that you can only see so far away or so long ago, only the ratio of how one relates to the other. Overall, the conclusion is unchanged: as rewind the clock, things look continually closer and younger until eventually they're right in your face and brand new.