You could always use profiles, its not really new. But it required you to run Firefox with commandline options. Whats new is just an integrated graphical user interface to select and manage profiles.

It should be described here: https://support.mozilla.org/en-US/kb/profile-management?redirectslug=profile-management-redirect-1&redirectlocale=en-US (updated a week ago). For some reason, clicking the account icon does not have the "Profile" submenu for me. And I am on the newest Firefox. Do you have the menu?

Profiles have been around for a very long time. They are collections of all browser data for a given user - pretty much all of the browser's disk usage except for the executable itself. AFAIK the new switcher just makes using multiple profiles easier. Just keep in mind that profiles are completely isolated, and creating a new one is like a fresh Firefox install. You can copy profiles but the copies will not sync between each other ~~unless you synchronize them with a Firefox account~~ turns out you can't have one Firefox account assigned both at the same time.

BTW when creating a new profile (not a copy), I suggest https://ffprofile.com/ to opt out of telemetry etc. easily.

Go to about:config and set browser.profiles.enabled to enabled, then restart Firefox.
Note: For some reason already existing profiles (via original Firefox profile manager) are not listed there.