Virtual machines are not small and do not sip storage or memory or processor resources. Virtual machines with emulators are yet less small, as they add the ability to (for instance) run Microsoft Windows for Intel x86-64 architecture processors on macOS on Apple silicon Arm architecture processors.
Parallels provides a supported means of running Microsoft Windows 11 for Arm (not Intel) processors, which doesn’t need architecture emulation.
Beyond the storage for actual virtual machines themselves, the files containing the operating system and user files for each guest operating system are also not small.
The least overhead approach is to host Windows 11 on Azure or elsewhere. There are various offers, including Azure Virtual Desktop.
This 256 GB Mac is very much under-purchased for many operations, including this usage. If still within 14 days of its original purchase from Apple, return it for a full refund and get a Mac mini with something more reasonable, like a 1 tB Mac.
I’d consider this Mac under-purchased for normal operations (photos, email, Messages, Pages/Numbers/Keynote, etc), much less for use with hypervisor guests or for software development or ML or such. I’d expect ongoing storage management with this storage choice, or having to go on a severe reduction of my existing usage and typical usage trend.