It'll be VM, use Parallels as it has better Windows 11 ARM64 support. You do not want to use Windows 10, it doesn't have x86-64 app compatibility like Windows 11. GPU acceleration is decent but no DX12 support yet.

I've been using Windows ARM on M1 as my primary work PC device since ~January when I got a 13" M1 MacBook Pro. I now have a 16" MacBook Pro M1 Max. Can share particulars of my Parallels config or answer any questions.