I currently have Armory 0.96.4 and Bitcoin Core 0.18.0.

Everything is fine and smooth.

1. If I upgrade to Bitcoin Core 0.21.0, will Armory 0.96.4 continue working fine? (Both online and airgapped)

2. (Not Armory question) Are there any reasons to even upgrade to Bitcoin Core 0.21.0? What are the benefits? I'm just a HODLer and I make just a few transactions every year.