Monterrey - Erase and start over again

Hi people!

I got a new Mac Mini M1 2020. I did a fast setup and installed many programs at once and now they are not working right. I would like to do a clean swep and start over again and not to have a messy library of third apps that might be causing issues. That is why i do not want was to reinstall the OS because it does not clean everything.

The thing is that Erasing All Content and Settings says sign out of Apple ID and all my previous purchases will be gone. Is that right? or they are still are in some cloud when i reinstall everything and login with my Apple ID again?

Which do you think is the best way to star over in Mac OS?

Thanks!