First you need to select the "Macintosh HD" volume and not the "Macintosh HD - Data" since the latter only contains your user account folders while the former contains the macOS system files.
https://support.apple.com/en-us/HT210650
It is a shame that Apple doesn't mention this in any official Apple documentation for upgrading to a newer version of macOS that I can find after a quick search, but I finally found a reference to which volume you need to select when re-installing macOS over top of itself which also applies to upgrading to a newer version of macOS as well.
https://support.apple.com/en-us/HT204904
The installer seems to think you only have 19GB of free storage space which is probably more accurate than anything you find within other areas of macOS since the macOS Storage Management details are known to be incorrect. Make sure the Trash has been emptied and all of your backups have completed fully transferring to the external media as the APFS system/backup snapshots can retain large amounts of deleted data until those snapshots are deleted (usually after all the backups have completed, although other snapshots may be retained for a week or so).
Make sure to have a good backup before attempting to upgrade macOS. You should always have frequent & regular backups.