No, you will not have to reformat the internal HD to accommodate a second OS.
Yes, it's permitted to have 2 (or more) OSs on the same HD.
Before you install macOS 12, please make sure you have a current Time Machine backup of your computer as it is configured today. Should something go sideways you can use that to recover.
How to do it?
(1) - Close all currently running apps and disconnect any peripheral devices and drives.
(2) - Convert the volume "Cuppa'Tune" to APFS format.
Launch Disk Utility and check the format of the volume "Cuppa'Tune". If the volume is currently in APFS format, then skip ahead to (3) .
If the volume is formatted as Mac OS Extended (Journaled), select the volume and then click Edit > Convert to APFS... It may take a few minutes to do the conversion.
(3) - Download the macOS 12 Monterey installer from the App Store. The installer will deposit an application named "Install macOS Monterey" into the Applications folder. It may also automatically launch that installer, if so then continue on.
(4) - Launch the "Install macOS Monterey" application. When prompted to select a drive or volume to install to, select the "Cuppa'Tune" volume and then follow the prompts through the process to the end.
When the installation is complete, the Mac will reboot into macOS Monterey and you will be prompted to run the Setup Assistant. Make note of the Mac user account name and password you set.
After that you can choose which OS to boot from by pressing and holding the Option key when you restart the computer.