Since you cannot restore the OS into an Apple silicon Mac, you would always fully restore by installing the OS from recovery/network recovery and then selecting the copy when prompted to restore.
A bootable copy, made with "Erase, then copy", is a replication of the source, made by Apple's tools (since 3rd party apps are not allowed to copy the OS). It's as close as possible to the source. I fit's not booting, it may be that the drive is too slow or not fully compatible: I would suggest a WD MyPassport SSD (which is about $120 for 1TB). I think you're more likely to get satisfaction with that.
I would also try booting in Safe Boot from the backup to see if that works.
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--Dave Nanian
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