BACKGROUND: A senior APPL tech stated that partitioning is no longer necessary in some instances. With her guidance over the phone, she seemingly configured my computer in that manner.
QUESTION: Re. Big Sur on MacBook Air, how does the user set up the operating system in order to utilize an external SSD to function as a 1) Time Machine backup AND 2) to archive files for long-term.
[Note: I know your “strict” approach to archiving, etc. and respect your opinion. My computer use and needs are far less sophisticated, and my risk avoidance level is low, as my performance is independent.]
Understanding why and how is a vital part of my mind set
Yes, I would advise to put your Time Machine backup on one drive and archive files to another drive. That way if you lose that one drive you don't lose your archive and your backup of that archive all in one incident. I also think it is overkill to use an SSD as an external drive since you don't need speed for either backing up or archiving, you need space. So : two separate drives, HDDs with space instead of expensive SSD with speed.
Other than that, I'm not sure how I would advise you. In the past having other data on the same drive as your backup often causes trouble with the backup. As it fills up the drive, it runs out of space. It can't work with those other files you have there and so it can't predict how much it needs to cull from the Time Machine backup. So you get messages saying that the backup is full. Maybe in Big Sur it will behave better.
If you wish to continue with this, I guess I would put everything in your archive into one folder on that drive, organized how you like. So the main level just shows the Time Machine backup and your archive folder. It would just be easier to move that archive elsewhere in the future, or delete the backup and let the archive use the whole drive. You'll just have to see how it goes. I don't think there is any danger to your archive, other than the single-point-of-failure I mention above. It is just that your backup may not last as long.
So why not get a second drive? If you spent the money on an expensive SSD, then money can't be an issue here. Get a large HDD, use it for Time Machine, connect them both with a hub so you still have one cable going to your Mac.