Thanks. I will follow up on your suggestions.
Note that I created a separate volume by using Disk Utility to take 1TB of my 4TB storage, to create that separate volume. There, I installed macOS 27.
Now, to download Xcode 27, I need to have an Apple Account for this instance of macOS. Note that I read in many places that one can run a second instance this way and Apple has no problem with it. In fact, when you boot one of them, it offers to connect to the other volume if you supply that login password. If you want to keep these instances isolated as I do, then you click "Cancel" to NOT make that connection. But is still lists that other volume name under "Locations" in Finder.
Note that when you power-on the machine, you have to hold the power button down and then it will instruct you to keep holding it so it can load the boot options. I let go of it once that instruction disappears and then I see the two volumes listed as boot options. It all goes very well. Only one is running at a time. Unlike a VM where the host would also be running.
I already have multiple different users running under the 2 different macOS 27 instances I can boot to.
I also created a /etc/fstab file containing the appropriate instruction to NOT even mount the volume from the other instance. This is needed because, by default, it finds and mounts compatible volumes. Fortunately, if you don't supply the password for the other volume's macOS user, then all the folders seen in Finder in that other volume are empty except "System".
Note that each of these two instances have their own FileVault key, and once I have a separate account so I can use iCloud from the second instance, then I will apply ADP (Advanced Data Protection) to that second iCloud as I did for the first one.