How do I limit my Apple Music Library from all of my Music library?

If your library is enabled for Sync Library AKA iCloud Music Library, then all music in it will be matched or uploaded, you cannot set some to be ignored. You can however make a separate library so you can have one that works with Apple Music and one that it independent.

tt2

You have the tools available and need to find a way to use them that is the best compromise for you. I have a main library of about 65k tracks, and a separate iCloud (Apple Music) library that has about 10k. The iCloud library includes all of my unhidden purchases, any Apple Music content I've added, and whatever else I've chosen from my main library to be available to all of my devices, Apple TV, HomePod, etc. I chose this route in part because I wanted to be sure that my original library couldn't be adversely affected by any automatic metadata update process in iCloud Music Library after reading a number of "Apple Music wrecked my library" posts.

As you say one possibility is to make a copy of the library, either by exporting it, or cloning the database files, and then fillet out what you don't want while not deleting the physical files. In older versions of iTunes an alternate approach was to change the media kind, e.g. change to say audiobook, to hide content from the music section of the library but still allow it to be accessible, however in recent versions of iTunes for Mac this either doesn't work, or makes a one way transfer into Books. As you say, a two library approach leaves you with housekeeping if you want the same content in both libraries and also want any changes reflected in both. Alternatively you can leave the Christmas music in your library, but uncheck it, and mark it as skip when shuffling, which should make it available if specifically requested, but prevent it playing at random.

tt2