If you take 11 units, you will have more than the required 10 units that will count towards your ATAR. Units beyond the minimum of 10 are known as backup units. Backup units comprise subjects that can count towards your ATAR if your performance in one of your other subjects is unfavourable. I will use my own subject combination as an example since I also took 11 units when I did my HSC:
- English Standard - 2 units
- Mathematics (now Mathematics Advanced) - 2 units
- Business Studies - 2 units
- Information Processes and Technology - 2 units
- French Continuers - 2 units
- French Extension - 2 units
Mathematics was my lowest-performing subject, and because my performance in French Extension was favourable, it ended up counting towards my ATAR, making Mathematics count as 1 unit instead of 2. This is the effect of having a single backup unit, that is, it can either count instead of a 1-unit subject, or it can reduce the value of a 2-unit subject to 1 unit, which halves the effect that unfavourable performance in the 2-unit subject would otherwise have on a student's ATAR. In my case, had I not taken French Extension, Mathematics would have counted as 2 units towards my ATAR.
Regarding your other questions, yes, Music 2 and Music Extension are considered two separate subjects, and you will receive separate HSC results for each. If you want to keep only 10 units, i.e. have no backup units, you can either not take Mathematics Extension 2 (leaving you with Mathematics Extension 1) or not take Music Extension (leaving you with Music 2). Both options leave you with 10 units.
I hope this helps!