Will the installer at runtime always install the latest macOS regardless of when I create the bootable disk?

A bootable USB installer is the unique version of the operating system that you created it from. Its version does not change until you overwrite that install disk with a newer version. Once you install an operating system on compatible Mac hardware, then the operating system's Software Update will do updates and/or upgrades to newer operating system versions restricted by the Mac's hardware compatibility.

Do you mean the installer app within the Applications folder? If so, then yes it will get updated the next time you run the installer app from the Finder. FYI, the installer app can actually be located anywhere on the Mac, but the default location is for the App Store to place it within the Applications folder.

Or do you mean the bootable macOS USB stick getting updated? In this case, if you used the command line to create a bootable macOS USB installer, then the answer is no.....the USB stick will not change the installer version unless you overwrite it with a later version using the same command line method as when you first created the bootable USB installer.

Oddly, the bootable installer I created by following the instructions is not bootable by setting it as the Startup Disk in System Preferences on the M1 Mac I created it from. Hoping it's bootable nonetheless. I have disabled SIP and

csrutil status 

confirms this (for the currently running OS).

I'm wondering what the difference is between disabling SIP and Permissive boot, and if I need to do more. I read here that the "Permissive signals to iBoot that it should accept locally Secure Enclave–signed boot objects"

A bootable USB Installer doesn't show up in Startup Disk.

You must shutdown, press the power button, then press again and hold until you see the Startup Options.

The instructions for creating a bootable USB Installer also have instructions on how to use it.

Why did you think you need to disable SIP?

Because that's the setting required to choose "Reduced Security: Allows any version of signed operating system software ever trusted by Apple to run."

I followed the instructions (Related Article: Create a bootable installer for macOS) and yet it doesn't appear in Startup Options, and because it's for an old version of macOS, which Apple says it won't let run with the standard Boot Policy settings. Startup Disk security policy control for a Mac with Apple silicon - Apple Support

What are the Boot Policy settings required to boot a bootable USB Installer for 11.2.3?

  Secure Boot:

  System Integrity Protection:

  Signed System Volume:

  Kernel CTRR:

  Boot Arguments Filtering:

Allow All Kernel Extensions:

User Approved Privileged MDM Operations:

  DEP Approved Privileged MDM Operations:

This Mac came with Big Sur on it.

(That list is from System Information, under Hardware...Controller.)

A bootable macOS USB installer compatible with an Intel Mac should appear as an option on the Apple boot picker menu when you Option Boot an Intel Mac. Option Booting is when you hold the Shift key immediately after hearing the startup chime on an Intel Mac (best to use a wired keyboard when using special startup keys especially if you cannot activate the special startup modes). This is regardless of the security settings.

The security settings only come into affect on an Intel Mac once you select the external boot volume from the Apple boot picker menu when Option Booting. If the security settings don't allow for booting from USB on an Intel Mac, then instead of booting from USB drive, the process will launch Recovery Mode where you will be given a chance to configure the security settings to allow booting from USB.

You will not see the macOS USB installer as an option in the Startup Disk System Preferences/Settings app no matter what the security settings are configured.

No idea about whether the Security settings matter on Apple Silicon Macs when trying to see if an external boot drive is shown as an option in One True Recovery mode. I haven't tried booting an Apple Silicon Mac from any external media yet.

Please be very clear & specific where you are referencing not being able to see the macOS USB installer and the exact model Mac you have since that may be a very important item here as well. You can get the exact model of the Mac by clicking the Apple menu and selecting "About This Mac", or if you cannot boot macOS, then entering the system serial number here:

Check Your Service and Support Coverage - Apple Support

It would also help to know the version of macOS USB installer we are dealing with as well to make sure it is even compatible with your exact model Mac.

The common issues for not being able to boot from a macOS USB installer are:

• USB installer was not properly created using the Apple instructions
• The USB stick being used is not compatible or possibly is not good. Macs are very picky about the drives used for booting and the quality of USB sticks is extremely poor. Best to try using another USB stick especially from another brand.
• Make sure to connect the USB installer directly to the computer. Disconnect all other external devices in case one of them is causing a problem.
• Maybe the USB port on the Mac is not fully functional....try using another USB port especially on the other side of the laptop.

Just noticed you are not the OP and are running an M1 Apple Silicon Mac...disregard the information at the beginning about Intel Macs, the other items later in my post still apply to Apple Silicon Macs. You really should have started your own thread.

Because that's the setting required to choose "Reduced Security: Allows any version of signed operating system software ever trusted by Apple

Are you trying to install an Apple OS that is no longer trusted. I’m not sure how far you have to go back to get one that is not currently trusted.

"Related Article: Create a bootable installer for macOS"

so the OP came here from Create a bootable installer for macOS - Apple Support

so the OP surely means the latter, no?

UPDATE: Kept reading. It seems I shouldn't have a problem.