macOS latest security update — confusion re updating

Big Sur is substantially more secure than Sierra, yes.

Apple tends to provide security fixes for the three most recent versions. That’s currently Mojave, Catalina, and Big Sur. The upcoming release Monterey is expected rather soon, too.

It is possible to run Mojave as a guest in a hypervisor, though that will require substantial system resources when active. Mojave is the last version with support for 32-bit apps.

Backups and your password practices and familiarity with common scams are as or more important as Pegasus.

Recognize and avoid phishing messages, phony support calls, and other scams - Apple Support

Change Passwords preferences in Safari on Mac - Apple Support

Apple Platform Security - Apple Support

NSO Pegasus has been quite targeted, from what we know of its usage by its purchasers. Dissidents, investigative journalists, political activists, political enemies, those with access to sensitive or classified or financial info, or those connected to same, have been targets.

If you are a potential target for the users of any of the Pegasus-like products on offer from various vendors, there is rather more work ahead for you: Device and Data Access when Personal Safety is At Risk

From what Apple says here https://support.apple.com/en-ca/HT211238 this computer just makes the qualification for Big Sur.

Though, the performance might be less than outstanding when compared to earlier versions of macOS's Big Sur is demanding.

Factor in, the Only 64 Bit support for everything without exception including Applications, extensions and drivers.

One could try installing Big Sur to a Reliable External Drive and test it out on this machine before attempting the installation as your go to OS.

There are several thoughts I will share with yo which I hope may be useful. First, the referenced update is only for the current OS, Big Sur. Second, It is always a good idea to keep your operating system up to date, along with other installed apps. (Yes, there can be a cost associated with upgrading some apps.) They are released because they contain new features and various system fixes. It is important to understand the difference between updates and upgrades. An update is when a newer version of the same OS is issued. An upgrade is when the OS is changed, for example from Catalina to Big Sur. An update is found, when available, in System Preferences. upgrades are often found on direct links to the upgrade or in the Apple App store. They are completely different. As a new OS is released, an older one will be classed as no longer supported. That means no more security updates. Eventually all older operating systems will become non-supported. Last, the most secure OS will always be the most recent one issued for the most recent released operating system, in this case Big Sur. All that stuff about older operating systems is pointless. I hope this answers your questions.

Welcome and very best in whatever direction is chosen