The blade SSD is a custom Apple unit it is not an M.2. Here’s more on it [https://beetstech.com/blog/apple-proprietary-ssd-ultimate-guide-to-specs-and-upgrades|The Ultimate Guide to Apple’s Proprietary SSDs]
And yes the 128 GB SSD was part of the Fusion Drive config your system was originally setup with. The SSD was used as a cache drive to the HDD (not visible). Using Disk Utility you can wipe it down and set it up as a regular drive.
Presently you’ve setup you're 2.5” SSD as the boot drive (not using the blade in any way) If you reformat it you could install your OS onto it as well as your most important app. You want to leave at least 1/2 of the drive empty so your OS and Apps have room for caching, paging, virtual RAM and scratch space.