When you upgrade to Windows 11 using the free upgrade option, the Windows 10 license that was previously associated with your PC will become associated with the new Windows 11 installation.
Most Windows 10 and Windows 11 licenses are now tied to your hardware (specifically the motherboard) via a digital license.
Microsoft's licensing terms generally allow you to have only one active installation per license. So, it won't allow you to run two different versions of Windows (e.g., Windows 10 and Windows 11) simultaneously on the same license, even if it's on the same hardware.
The safest approach would be to use separate licenses for each installation if you plan to keep both active.