What do you mean by "injecting secrets into the environment"?
You mean a section in your app.yaml like this one:
env_variables:
DB_PASSWORD: "this is a secret"
As for as I know, in the Standard and Flex environments, app.yaml is the only way to define environment variables.
A: No. It means the secrets are stored as environment variables in the container.
Q: What does the deploy wrapper do?
A: It prompts the developer to input the ansible vault password , decrypts the vault and injects the secrets into the environment.
Generally speaking, I follow the 12-factor approach:
https://12factor.net/