I was playing TF2 and I turned on a setting so I can see exactly what damage I am doing. I noticed after back stabbing a few enemies the number ranges from 100 to 1000. So why does the game say I am doing like 900 damage per kill... is this because it is an instant kil or what?
Backstabs deal 600% of the target's current health, as listed on the Spy-cicle's wiki page. I believe this damage is the same as all knives' backstabs. So killing an almost-dead scout will yield damage much lower than an overhealed heavy, but the intent is basically that no matter how much health your target is and no matter what ridiculous, unfeasible buffs they have, a backstab will instant kill them from damage alone (though a couple things like the Razorback can still save you).
Also note that, while spy backstabs are automatic crits, the damage they deal isn't "critical damage". Effects that block critical hits will not reduce backstab damage at all.
As listed on the item's page the Spy-cicle can do 34-46 damage with a frontal hit, but melee damage doesn't affect how much a backstab does.