Can I get some clarification wrt to how to connect AEP and Target? From what I gathered, currently AEP has to leverage Audience Manager? In the absence of Manager, it can work with tag extension as well? With the beta release, I'm assuming the connection becomes automatic?
You don't actually need an Audience Manager license to share audiences from Platform to Target. You just need the Shared Audiences service (aka Audience Library) configured. This service has been around for years and is the mechanism used to share Analytics segments to Target. With Shared Audiences configured, Platform audiences will automatically populate the Audience List in your Target account.
This blueprint explains the architecture and the Implementation Steps section has a link to the provisioning request form for Shared Audiences, in case you aren't already provisioned: