"Macintosh HD - Data"

You need to forget everything you think you know about how macOS works. Starting with Catalina and Apple’s new file system called APFS the rules of game have changed dramatically. Macintosh HD - Data is a critical part of how macOS Catalina stores user data. Removing it would kill your installation and lose all of your user data. Catalina divides the boot device into two volumes, Macintosh HD and Macintosh HD - Data. Macintosh HD contains all of the operating system’s files and data. It cannot be altered at all by the user. Macintosh HD - Data contains all of your user data, files, apps, documents, etc. macOS Catalina manages both volumes separately but Finder shows only Macintosh HD. It’s all under-the-hood stuff.

And Macintosh HD - Data does NOT prevent backups to Time Machine. Millions of people have been using Time Machine with Catalina and now Big Sur with no issues at all.