You can run it on either the gateway where GWE is running (in this case your VM) or on a development machine. The command just takes a look at the structure of the app tarball and other things like file permissions, etc.
Yes, in order to get your app to automatically start on boot you have to provide a supervisor.conf file. Take a look at the docs here on supervisor.conf basics.
Are you saying that the app is passing the
--check-tarball test and still won't install? If that's the case then I agree that the debug output from the
--install-apps command is not very useful.
What version of GWE are you using?