Physical or Virtual vCenter?

Physical or virtual vCenter depends on your availability and recovery requirements of the vCenter Server. When using a virtual vCenter Server you can benefit from vSphere HA and DRS for the availability of the vCenter Server. A physical vCenter Server is almost always choosen because it will be available when you virtual infrastructure is not. But what about services it depends on like DNS and Active Directory for authentication? If these services are virtual then having a physical vCenter Server doesn't make sense.

Also, keep in mind that VMware is moving to the virtual appliance and with a physical vCenter Server it is only possible to install vCenter Server for Windows which will be deprecated in future releases.

Embedded or External PSC?

A embedded PSC does have it's advantages regarding manageability, only 1 VM needs to be managed. It's possible to migrate from an embedded PSC to a external PSC. If you have no use case for an external PSC, do not use it. You can use the vCenter topology decision tree poster to make the decision about an embbed or external PSC. http://blogs.vmware.com/vsphere/files/2016/04/vSphere_Topology_Decision_Tree_Poster-v5_0804016.pdf