It’s a simple read. If LB stays outside, you stop in the hole. If he steps towards, you go outside.
Really, the play was Stick-Nod and is a specific red zone play that’s highly prevalent in the NFL.
Bunch formation absolutely eats against man coverage. You can flood the intermediate area, run screens if they’re off, dictate matchups.
Having TE’s who can block and catch opens your offense up so much.