I don't think the show has fully fleshed it out yet but I don't think the idea is that the "Sacred Timeline" is the ONLY universe, its just "the most important". You cannot fuck with it, the TVAs primary purpose is to keep it stable according to the wishes of the Time Keepers. Which suggests its super important to them, likely they are not actually around yet and its the timeline that "creates" them in the future, and they sent/created the TVA in the past to ensure they are born without disruption. They are telegraphing so hard the TVA and Time Lords are evil its a bit cringey.
Infinite other universes exist and do their own thing with the TVA acting as oversight, an infinite number exist with a female loki (or a tranny loki, or a black loki, or whatever) who all led their own life from beginning to end. Variants only start popping up when they try to fuck around and alter things by using time travel, I'm not clear on whether variants happen when one of them tries to fuck with "the sacred timeline" or just fucks with their own universe. Time travel must be a component of being declared a variant, since without it you are on your own little universes sequence.
Once you introduce multiverse and time it all gets messy and lame, since infinite is an impossible concept for human beings to really understand, and an infinite number of universes means nothing you do really matters, everything that can happen does happen. I do like the idea of the "Sacred Timeline", it introduces the idea that one single verse out of the infinite is important for reasons TBD.