This below has tried and confirmed Working on macOS Big Sur as well as Monterey.
The main purpose of this exercise is as per mentioned above, preserving the storage of the main ssd(hdd) of MacOS system.
Downloads
is the folder that filled up very fast and soon enough will make system suffocated for a disk cache. So it is always a better practice to keep it out from the main storage and so move it to the external storage.
TL;DR