I need some clarification for what I'm doing on a factory reset with apple devices

Particularly a mac mini 4 pro, but I do have other devices that I want to refresh. In terms of reformatting, do I need to log out, or just enter into safe mode, reformat and just reinstall everything? Additionally, if I want to do the same again in the future - can I leave my apps on my external NVME drives (I have 2 set up in Raid 0) to run straight from, or do I have to drag and drop back into applications and then export back to my external drive?

Thanks in advance for any advice given.