The bracket for attaching the device to the bike is not included in the package. A universal seatpost bracket, such as the compatible 27.2 mm, must be purchased separately to mount the device correctly on the bike seatpost.
Yes, the Garmin Varia RTL516 is compatible with the Garmin Edge 530. Both devices support ANT+ and Bluetooth, which enables easy connection. The Varia RTL516 can be connected to the Edge 530 to provide warnings about approaching vehicles.
It happens to me from time to time that a bike is not recognised. On my route, these are mostly slim gravel bikes. More massive e-bikes are always recognised.
As far as I know, a flashing rear light is not permitted in Germany, for example, and RTL516 does not do this either. RTL515 has more light functions and also a flashing mode.