"I didn't have time to build it to scale or paint it."
The joke works for me on multiple levels.
It's a joke about the selective compression of, you know, TIME in movies. Because we don't actually see Doc working on the model, we just think, "Some time passed while he built that model." But the model is really too complex for the unshown time, which tickles me.
Marty is a little stunned by how detailed the model is, and how nuts Doc would have to be to think it isn't good enough. Because he likes Doc, and wants to reassure him it's okay, there's a little nice relationship interplay in the exchange...
Doc: "Let me show you my plan for sending you home. Please excuse the crudity of this model. I didn't have time to build it to scale or paint it."
Marty: "It's good."
Doc: "Oh, thank you. Thank you."
Doc actually did paint everything off-white, which would be even more time-consuming than just gathering all the elements and setting them on the ping-pong table. In true boffin style, Doc thinks his explanation would be clearer if he added much, much more detail. But if the prop makers hadn't painted everything one color, the image would have been too cluttered, and the wind up car and wristwatch wouldn't have popped against the neutral background.
It's great foreshadowing. Doc builds a model to demonstrate how every little detail has to be just perfect, and the wind-up car catches fire and flies off the table. This creates a nice bit of suspense later, because if Doc couldn't even get a demonstration to work...
In BTTF III, it's a nice callback to the first movie. Because events repeat themselves in the films, Marty knows the drill by now...
Doc: "Marty, once more let's go over the entire plan and layout. I apologize for the crudity of this model, but I just..."
Marty: "Yeah, I know, Doc, it’s not to scale. It’s okay, Doc."
I love the plausibly (and improbability) of Doc quickly making these made from 1885 items. Doc is a blacksmith, so it makes some sense he'd fabricate a miniature Delorean from sheet tin and bullet casings. Since 1885 pre-dates model railroading, he has to build the train out of whatever is at hand -- part of a corncob pipe, spools, revolver parts. Again, notice how nicely these props read -- the bodies are all dark brown/black parts, while the details are lighter-colored wooden parts. "TIME MACHINE" is written in white, so Clara can't possibly miss it when she comes upon the scene.
I realize there is no "I-apologize-for-the-crudity-of-this-model" scene in BTTF II, the very film we're celebrating today. BTTF II is my least favorite of the three movies, as it's a confusing mess. The lack of a model of Hill Valley in BTTF II might even contribute a little to my disliking it.
As long as I'm ranting about BTTF, My theory about the trilogy is: the construction is musical -- BTTF I is the presentation of the theme; BTTF II is a fugue with variations on the theme; and BTTF III is the pastoral.
Speaking about crude models that aren't, here's a link to a papercraft model of the Time Train from the end of BTTF III.