A Monterey System drive will format APFS. You have no choice except whether or not to turn on FireVault encryption—which you can enable after everything is installed.
https://support.apple.com/guide/disk-ut ... l14079/mac
Likewise, there is no need to create additional Volumes unless installing another macOS—and then you can create or delete as needed. SSDs do not work like HDDs — you cannot optimize them in any fashion.
You can use Migration Assistant (from your old System Drive or a Time Machine backup) or do a Clean Install. MA gives you four choices: System & Network, Applications, Other Files and Folders (User data) and All (check all three boxes). If you have additional User Profiles, you can select those, too.
https://support.apple.com/en-us/102613
Always select
System & Network as this saves a lot of time over reinventing the wheel. Selecting
Other Files and Folders brings over all of your work files (User data) — you can clean house afterwards if you like.
If doing a Clean Install, you will reinstall your Applications one at a time which creates new supporting files in your Library and Users/(user name)/Library. This can leave behind a lot of old junk that hasn't been needed in years but... well, on my Mac, that would take a week to ten days which is why I've not done it since 2012 when it only took me four days.
Are you using an NVMe or SATA III SSD? If an NVMe blade, TRIM is enabled by default.
If SATA III, you should enable TRIM once booted from the SSD with the following Terminal Command:
sudo trimforce enable <Enter or Return key> followed by your Admin password, then enter y on the various prompts.