usually my iTunes/Photos app libraries/data are on an TB3 NVME external drive, even for most software like Office, etc.
only certain applications that is directly tied to the default installation location in someway, which requires a lot of symlink/hard link to move them off to external drive are left in its default location.

hence I usually just get 256gb storage Mac, no problem backing up my 256gb iPhones

confirmed not enough. if u really need to do the backup on the ssd itself, u need at least 512GB. unless u set the itunes backup location to an external HDD that is in larger capacity.