Help on my Electronic Project Deployment

Wow, this is really interesting. I tried it now and it really works. So the GND from my 12V bench power supply is not connected to the GND in my ESP32 but it still works.
Amazing! I actually read a lot of posts about connecting the GND of both the external power supply and the ESP32 GND.

An example is from this How to hook up a 12V Relay Module? - #5 by ocuser

I am using the typical Chinese brand of relay which I often see from AliExpress. I noticed that it contains a DS1 component which I think is a flyback diode for the external load if I am not mistaken. I could not find the datasheet for this.

Just to follow up, is the LM2596 step-down converter still needed to power my ESP32?
I have read somewhere that ESP32 can be powered with an external supply of 5v to 12v. So I am thinking if stepping down my 12V bench power supply output to 5V is still needed or if are there any added benefits.

Thanks to both of you! I am learning a lot.