Dividing an external HDD- Partitions or volumes?

I'd select Disk Utility > View > Show All Devices, select the topmost device, and erase it as APFS (case insensitive) with GUID partition scheme.

Then, you can create or delete additional volumes in that container. The additional volumes can contain data, bootable macOS versions, Photos library, Carbon Copy Cloner backup etc. Those volumes share the same storage so, unlike when partitioning, you do not have to set a fixed size for any of them.

digdave56 wrote:

I have an M2 Mac mini running Sonoma and an external hard drive, which has a carbon copy cloner bootable partition and a file storage partition. I am retiring that drive as a precaution and while setting things up in DU, noticed that there are two options. I can partition the drive or I can set up separate containers. To make matters more puzzling, apparently I can have multiple containers inside partitions and multiple partitions inside containers. This is new since I set up the drive I am replacing. Recommendations as to how you would set up for this purpose? Thanks.

Containers are equivalent to Partitions. There are no "partitions" on APFS. So, you can't have multiple containers inside partitions. You can have multiple Volumes inside a Container. However, to create another Container, you use the Partition button.

All the Volumes in a Container share the storage space allocated to the Container. You a set quotas or reserves on the Volumes. If you will be using APFS, you are better off with Volumes.

digdave56 wrote:

I have an M2 Mac mini running Sonoma and an external hard drive, which has a carbon copy cloner bootable partition and a file storage partition.

I too have M2 Mac Mini with a External SSD Drive

It too has been used by Carbon Copy Cloner version 7

" I am retiring that drive as a precaution "

Why does one feel the need to retire the drive ?

It is a good adjust to Time Machine Back

It would fall right in-line with a 3-2-1 Rescue Plan

If you have used or are using Time Machine Backup Utility  you maybe able to Restore the Deleted Files 

For future purposes

To truly protect your non replaceable Data - have a 3-2-1 Rescue Plan in place and always current

3 Backups using 2 methods and 1 off site incase of natural disaster or un-natural disaster.

Each of the above should be done to a Dedicated Single Purposed External Drive 

It depends on what you want to use the new drive for. There are logical reasons for any kind of configuration, depending on use. And for any given use, there are n - 1 different incorrect configurations.

https://support.bombich.com/hc/en-us/articles/20686469175575-How-to-restore-from-your-backup

To further illustration what CCC can do to protect your data

digdave56 wrote:

The drive is ~ 8yo is why I’m ‘retiring’ it

Good idea

The follow the advise from any of the other 3 contributor and reformat as per your needs