Move any previously created wallet files first. As I think what you're doing is making a wallet and then pressing file>new/restore. And the option will appear.
There is no need to move any wallet files. You can have more than one file on your file system!
and that's it? I can generate private keys off the seed alone?
Yeah electrum is a deterministic wallet. The seed leads to the master private key and child private keys are derived from that. It's a lot easier to backup than a wallet with unrelated private keys.
Almost all wallets are now deterministic. Even Core.