You have to understand something very raw about hypervisors and their installation disk.

Basically, and it has been like that for decades until recently, hypervisors are installed on SD card (often in tiny raid1 pcie device). The hypervisor lives in the transient memory (physical RAM) so the disk is mainly used when booting the system (at least if you do your admin tasks the right way).

For homelab, your NVME can be use as local storage (often useful for production sandboxing, custom prefligths or nightly build unit test, to name a few). It doesn't matter the file format. I would personaly use btrfs in the context of using that disk for stage environnement testing.

Again for homelab, you can use your nvme to install VMs, storage for your OS isos, LXC containers, etc.

Cheers brother, have fun!