1
The options in the Settings app - Accounts - Windows Backup can only backup your user settings to your Microsoft account and sync your files to OneDrive, it is not a file backup function.
If you do not want to use OneDrive, open the Settings App, go to Apps - Installed Apps and you can uninstall OneDrive app from there.
2
The old Windows backup function still exists in Windows 11 in the old Control Panel, and even if they do eventually move all options from the old Control Panel to the new Settings app, that would also be moved to the Settings App because so many people still use that function and people will need to restore their data form the backups they have created.
Open the old Control Panel, and set View to large icons.
There, you will find the 'Backup and Restore (Windows 7)' applet.
That can be used to setup a backup of your full system to another drive.