What happens if I delete macOS Sierra from my desktop?

I am not completely certain, but I think what you are showing is a picture of your Hard dDrive which you've named 'macOS Sierra' at some time. If so, what you do is go down to Preferences under Finder, next to the Apple logo, and click on it. That will open a window where you can uncheck the display of 'Hard Disks'.

Is this Disk an external disk attached to your iMac, as your profile says you are on macOS Catalina (10.15)

I am assuming your main disk is Catalina. If you put the macOS Sierra disk in the Trash you will

be ejecting it so it will no longer be mounted and usable until you restart again or mount it in

Disk Utility.