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Yes generally speaking you should only run kubernetes on kubernetes nodes. But I wouldn't think of it like you 'have to run applications inside of kubernetes' but moreso 'since you have kubernetes installed why would you run your apps any other way?' All applications that run on Linux can be put in a container and run on kubernetes (that includes weird stuff like libvirtd and Xorg lol). A single node k3s setup is actually extremely common. You can get k3s up and ready to go on a single node with literally one command:

curl -sfL <https://get.k3s.io|https://get.k3s.io> | sh -

The only difference between the agents and servers is control plane stuff runs as part of the k3s binary on a server else all nodes are agents and can run workloads. For testing/playing around reasons I install k3s directly on my laptop to test (Because it's so easy to get from zero to full blown kubernetes). Obviously wouldn't recommend running like this in any kind of production capacity...