It's the latter - podman just sets up all the necessary stuff - namespaces, cgroups, seccomp, network, mounts, etc - and then executes the child. No monitoring whatsoever. The best you can do is to have it listen on the socket it uses for the control API (similar to the docker socket).
However, the quadlets technology allows you to easily setup systemd using systemd generators to initialize the containerized applications using podman and then monitor it for any crashes. Quadlets essentially does everything that docker compose does.
That aside, a container's main overheads aren't the compute or the memory. It's the storage overhead. You're essentially replicating the minimal Linux userland for each container, unless that's in a shared layer.
