I don't work for VMware and I don't know what the plans of VMware with regards to running VMs on M1 chip. It is a complex problem as M1 chip and Intel chip are different architectures. It also depends on what Apple wants to do.
The problem you encounter is because you have a Mac mini with M1 chip.
If the Mac hardware still using Intel CPU, you should be able to run XP or Windows 10 VMs (or other Intel x86/x64 OS VMs) using Fusion 12 with Big Sur as host OS.
Starting with Fusion 12, VMware uses the Apple macOS hypervisor APIs. Depending on your usage, there could be a slower performance compared to Fusion 11.x (or even older versions).