Include external drive in Time Machine backup: compatible formats?

Question

I want to also back up my external drive to another Time Machine drive, but when I want to stop Time Machine from excluding it, I can't, since it's not clickable:

I know the problem is, that it has to be in another format (currently ExFAT). But which formats are compatible and which are best?

Answer 1

According to this article, the external drive has to be either an HFS+ drive or (since Big Sur) an APFS drive! I tested it with an external "APFS encrypted" drive and it worked. I was able to disable the exclusion in the settings and thereby back up the external drive to Time Machine!