Can Mac mini M4 use a 2242 NVMe SSD for storage upgrade?

No.

There are reports that the M4 mini has SSD storage on a module that is separate from the motherboard. But

• The SSD storage is not on standard M.2 SSDs. It is raw flash storage on an Apple-specific module. Nobody with the possible exception of Apple's Self-Service Repair program carries those modules, and you obviously are not going to get a break on Apple SSD prices by ordering SSDs from Apple themselves.
• The M4 minis are not designed to be user-serviceable.
• Even if you could get parts to do the upgrade, you would almost certainly need a second Mac that was running a special program to make the Mac mini usable again, following the upgrade. All Macs with T2 security chips, and all Macs with Apple Silicon chips, encrypt the contents of their SSDs in real-time. The contents of the SSD must be encrypted with the same keys that the T2 or Apple Silicon chip is using; and they won't be, immediately after any hardware change. You can't successfully upgrade a M2 Ultra Mac Pro without a second Mac to reset it, and that's an Apple Silicon Mac for which Apple actually sells raw flash modules.

You would do well to assume that the only storage upgrade that you will be doing on any M4 or M4 Pro Mac mini is an external one.

You are not going to get that type of assistance on these forums. The M4 MM's are NOT designed to be user upgradeable and unless you are a VERY VERY qualified tech attempting to do an upgrade on it is dangerous and stands an excellent chance of bricking the computer!!!!

In short, if you already own the MM then get yourself external storage and forget the other option. If you are considering a M4MM then do the right thing and buy one with the amount storage you want/need. If money is the problem, save longer!

Nope. Apple's custom M4 SSDs are not NVMe drives.

You will need an M4-specific aftermarket drive, but those are still so new that customer reviews are not yet available. Also the M4 is not intended to be user upgradable so some computer technician skill will be required.