.............I was going to answer with option 3, but I'd have been lying :sulkoff:
I did mine last May (the one where it poured down hard for the whole week!) and thoroughly enjoyed it!
Tent, Hammock or Tarp, it's up to you. I tarp'd and bivi bag'd it for the week, but sometimes I did wish I'd taken a tent - especially when I woke up to find a HUGE grey tree slug had crawled into my mouth!
You'll spend 2 or 3 nights under a tarp anyway. They supply an Aussie hootchie and used to supply a British Army bivi bag for that part of the course, but I understand that you have to take your own bivi bag nowadays.
With regard to privacy, the base-camp area is pretty large and you can camp as close or as far away from others as you choose.
As for knives, they issue you with a Frosts Clipper and they prefer that you use it on the course, so that everyone is operating with the same cutting tool. There was no mickey-taking at all on my course. Sure there were some gags and "insightful comments" from the staff, but always to a good end and never ever were they malicious. Don't bother taking an axe or parang - you won't be allowed to use it. Any heavy cutting will be done by the staff. If you've got a crook / hook / spoon knife, take it along.
A few sheets of coarse and fine sandpaper for sanding your carved wooden spoon etc, is a good extra to take (keep it in a ziplock bag and dont put the green wood in the same bag as the damp makes the sand come off the paper).
A foam sit-mat is a good idea. There's a fair amount of sitting on logs around the camp fire, carving, making cordage, etc and it helps to reduce the numb-bum!
If you're getting there by public transport, take a change of clothes for the homeward trip and seal them up in a plastic bag to change into after the final assessment. There was a camp shower for a freshen up, but I was still minging (by normal standards) by the end of the week!
The course is alcohol free (alcohol & sharp knives - never a good mix), so don't bother taking a crate with you - although I did take my hip flask for a nightly nightcap!
Food is all provided and I never went hungry.
Head torch and spare batteries is a good plan.
Gloves are a good thing too - nettle cordage and hot billycans - OUCH!
Have a great time!