There is a corollary to the accurate and comprehensive replies already posted. Inheriting the existing backups when asked is generally a good idea — unless — it is that Mac's only backup drive.
The reason is that TM guarantees an absolute minimum of one and only one completely restorable system backup. The very first incremental backup created subsequent to any large change to the source volume's contents may just be large enough to cause TM to delete all previous backups. Potentially years worth. It will delete them only after completing the one and only one completely restorable system backup it guarantees. Users who erroneously assume TM is an archival system (which it has never been) tend to complain when it does that, conclude TM is no good, the latest macOS version broke it, etc.
Another reason is that if you choose to create a new backup on that same backup device, it is unlikely to have sufficient space. With the passage of time TM will eventually claim all of a backup drive's capacity, leaving only enough to create an additional incremental backup, after which older backups get deleted. Meanwhile, the existing backup remains untouched. It will be off limits, so TM won't be able to do that. The only way to resolve that problem will be to erase the entire backup drive.
One and only one backup drive does not comprise a comprehensive backup strategy anyway. Get more, if for no other reason that any device can fail at any time. TM will use as many backup drives as you wish to provide.