How to avoid writing to the local drive C

It's up to the app itself. If the app doesn't support redirecting that (something like -settings:X:\PathToSettings on the command line) then you have to do it this way. The only way around it would be virtualization, which we don't do.

For example, app that's written using Electron usually has parameter to override data directory, i.e., --user-data-dir=DATA_DIRECTORY. Some apps also check if a specific environment variable exist, such as QBT_PROFILE for qBittorrent and VSCODE_APPDATA for Visual Studio Code. Others also check for local file or folder existance, such as portable_mode.txt for OBS Studio, portable.dat for CCleaner, portable folder for VLC, and many more.

If the app doesn't provide native portable mode then there's nothing much to do other than using portable launcher like PAL. However there is a dirty trick by altering USERPROFILE, APPDATA, and LOCALAPPDATA environment variable to the path of your choosing, this is not recommended as it also affects every subprocesses launched by that app (possible corrupting other launched app). You can also contact the app maintainer if the project is open-source and simply wait until it's being implemented (less pain and probably the best way).

EDIT: Symlink and junction is also possible but currently can't be done using PAL (without adding custom code), also requires administrator privileges which is impossible for normal user to gain access to. Probably not working on non-NT filesystem (FAT, FAT32, etc).