Answer to your SQL upgrade for LRE2021 Questions:

• Yes, As per the Micro Focus system requirements pdf for LRE 2021. LRE 2021 supports Microsoft SQL Server 2016 database software
• Nothing need to be done in the Microsoft SQL Server 2016 database, other than making backups before upgrading to LRE 2021
  • For details on how to make backups of database schemas, please review the Microsoft SQL Server 2016 help files or contact Microsoft (SQL server) supports
• You do not have to upgrade the Microsoft SQL Server 2016.; However, if you do want to upgrade Microsoft SQL Server 2016 to Microsoft SQL Server 2017 or 2019 you can. At this time it is  optional.
• CAUTION:  If you decide to upgrade to Microsoft SQL Server 2019, Upgrade all LRE machines to LRE 2021 FIRST. After configuring, testing and verifying the LRE 2021 software works, THEN upgrade to  Microsoft SQL Server 2019 as the LRE 2021 sp1 does not support Microsoft SQL Server 2019.
• CAUTION:  Review the Microsoft SQL Server 2019 installation guide for details on how to upgrade Microsoft Database software BEFORE starting upgrade.