Do Tez containers run inside of YARN containers, or instead of YARN containers?
tez-site.xml is separate, yes. Because without it, Tez wouldn't know how to run on its own.
Tez is more of a replacement for mapreduce, not YARN
If you run a Tez job it'll show up in the YARN UI.
A Tez container (part of tasks) are therefore allocated into a YARN Tez job (running a collection of YARN containers consisting of Tez containers)