which disk to install macOS Big Sur? Macintosh HD or Macintosh HD-Data?

The Big Sur upgrade process will just sort out the startup drive details, but it is also 4GB (uncompressed) larger than Catalina, so it will take its sweet time to perform the upgrade. Just do the Time Machine backup before you begin the upgrade.

Macintosh HD.

I don't remember the upgrade installer allowing selection of the Data drive.

Did you ever previously reinstall Catalina?