1. would it be possible to have a Network Extension provider
"installed" into the bundled app rather than having it in a system
extension?
That depends on what you mean by “installed”. NE providers are always packaged as either an app extension or a system extension. It’s not possible to implement an NE provider in any other context. The appex or sysex is then packaged inside a container app.
2. would the Network Extension provider installation need to be
supervised (e.g. user enables in System Preference) or it is possible
to have it installed without user interaction? (e.g. MDM solution )
We usually use the term “supervised” to mean something else entirely. I think you mean “requires user interaction” in the quote above. So, presuming that…
It is possible to install the NE container app via MDM and then push configuration profiles that configure its embedded provider.
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Quinn “The Eskimo!” @ Developer Technical Support @ Apple
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