FYI,
Apple sunset iTunes for macOS in the fall of 2019 with the release of Catalina. iTunes has been defunct on Apple Mac's for the last four major operating systems over the last four almost five years. Did you upgrade to Ventura from Mojave or an older macOS version? I usually don't recommend doing that as it is not tested as well as upgrading from the last release or perhaps the one prior.
iTunes only exists on Microsoft Windows for lack of a better solution and the manpower to re-write iTunes for an operating system that is not native to Apple. Best I can tell, iTunes for Windows is rarely updated and only for security updates. It is a veritable beast and Windows users have been complaining about it lately.
Apple used to charge a lot more for iCloud storage but now offers 50GBs of storage for $0.99/mo = $12/yr. Which is more than enough to backup an iPhone an iPad and then quite a bit more. The next tier is 200GBs for $2.99/mo = $36/yr and the 200GB tier allows for family sharing. Apple iCloud backups are automatic and transparent and you don't even need to think about it providing you turn it on. It's a no brainer for most people.
Although iCloud backups are protected with your Apple ID/PW they are not encrypted in iCloud and can be requested by a warrant or court order and Apple will comply. Otherwise they are very secure.
Backing up manually via Lightning cable is tedious with multiple trust login prompts plus the time it takes to backup an entire device. However, this is the most secure method of backup because only you and you alone have the keys to decrypt an encrypted iPhone backup on a PC / Mac even more so if the Mac is an Intel w/T2 Mac or an Apple Silicon Mac as they are all hardware encrypted at the factory. Turning on FileVault merely generates a recovery key which can be escrowed in iCloud, an MDM server or you can print it out, write it down.
The location of the backup files is ~/Library/Application Support/MobileSync/Backup. The backups use an SHA-1 hash naming convention. The first SHA-1 hash is tied to the mobile device and is the same if you run another backup to a different computer. Each device creates its own hashed folder. There is a database within as well as many sub-folders containing hashed filenames. Multiple backups are kept inside each devices SHA-1 hashed top-level folder. It is best not to alter nor move these files or you might not be able to restore the backup. In order to effectively manage multiple copies of these backups on external storage, you'll need to keep individual copies of each tree and all sub-folders, files and supporting database, etc. Old iPhone backup used to use disk images but no longer. The on disk data structure is complex. If you search online there are forensic analysis white papers which have figured out how it all works. There are 3rd party apps to extract data from backups and if encrypted can unlock the data providing you have a password. Someone using those tools could brute force attack your password and unlock the data if the password is weak. See the xkcd cartoon about how to set strong memorable passphrase. If you do end up copying / moving the backups manually you should definitely ensure the backups are encrypted. You should also extensively test restore operations as you might mess things up and therefore doom your data to oblivion when disaster strikes.
Apple on the topic:
Locate backups of your iPhone, iPad, and iPod touch - Apple Support
One can only speculate on the reason Apple chose to remove the option to save a backup besides the internal storage. It might be the fact that Apple tends to err on the side of security. Saving to the internal disk means the backup is encrypted at rest on the disk even if you chose not to encrypt the backup and if you turn on encryption then there is an extra layer of protection.
iCloud Backups are truly the preferred method as they are a set and forget feature that will save your bacon if your iPhone is destroyed, lost or stolen. One never knows when disaster will strike. iCloud backs up daily and you would experience a reduced chance of data loss as a result. I use iCloud backup and it's proven to be extremely useful. I only make full offline backups when I plan on testing beta OS releases and I need to be able to roll it back to the prior release.
