Hi Aditya,
You are correct. The virtual appliance (VA) is a custom VM image provided by SailPoint and hosted by the customer in their intranet. SailPoint only provides updates for the VA, and doesn’t manage it in any other way. Each connector has a different way of interacting with a source depending on what APIs the source has to offer. I am not familiar with SuccessFactors and how the connector works with it. Based on the connector docs, it looks like the SuccessFactors connector can do the attribute filtering on the source before pulling them into the VA, but I’m not 100% sure on that. Even if a connector has to pull the attributes into the VA and then do the filtering, all of this is happening on the customer’s own infrastructure and within their intranet.