I have the older base model M2 mini.
I do not use the internal drive at all.
The mini is run entirely on the external.
One thing to be aware of is that if your external SSD is connected via USB 3.0/USB-C the drive speed will only be around 350MB/s compared to the internal SSD of around 2,000MB/s.
To the uninitiated that sounds disastrous and they think they will have a slow computer.
However, the speed of a computer mainly depends on the CPU/GPU and the drive has very little effect except when copying hundreds of gigabytes which is not something most people do regularly.
When I started on this path over 15 months ago I checked the performance of the Mac running normally on the internal SSD and the external using GeekBench. The scores were virtually identical.
I then tested it rendering and exporting video and there I found the externally booted mini was not as fast . . . it was maybe 4% slower.
To put that into context, a one hour export would take a couple of minutes longer.
I can live with that! When using the computer normally there was no detectable difference.
Two months ago I bought an NVMe in a Thunderbolt enclosure (over twice the price) which is actually faster than the internal SSD just to see what I had been missing.
Yes, it is much faster copying gigantic files (which I never normally do) but in normal use I just can't tell any difference.
I suppose it will save a couple of minutes when exporting an hour long video but was it worth all the extra expense?
No!