A new disk drive (named "update") appeared after erasing my disk and reinstalling Big Sur

Hello, I'm a new iMac user here. Literally. I am just able to afford an iMac system now and this is my first iMac ever after 3 years of saving. Which explains my newbie question. I hope you can help me. Anyway, here are my questions:

1. Can someone tell me what the new disk drive is for? (see picture)
2. Can someone help me understand what the contents of this drive are? (see picture)
3. Is it save to eject this drive?
4. Is it safe to delete the contents of this drive?
5. If yes, how to safely delete the files?

A little history:

My iMac originally came with Catalina. So when Big Sur happened, I happily updated. However, to my surprise, the performance became VERY SLOW. The boot time is now at about 2 minutes and 30 seconds before I can fully use the Mac. The "hammer that drove the nail" was when I was having a zoom meeting with valued clients, and we were editing our documents and my Mac froze.

So I decided to reinstall the MacOs.

I did the "erase disk" procedure first, before reinstalling Big Sur. HOWEVER, the internet connection suddenly dropped and the installation failed.

So I performed an "erase disk" again and reinstalled the OS.

But the interface was sluggish so I decided to restart the Computer first and launch Recovery Mode again. To my surprise (I'm easily surprised), a rotating globe icon appeared and performed an internet recovery procedure. Cutting the long story short, I was able to install Mojave. When the installation finished, a new disk image appeared. It was named "update". When I updated to Big Sur, the disk drive was still there. I'm not so sure why it's there as it was never there before.

I appreciate any information on this. Thank you in advance! :)