I have a new domain registered through Cloudflare for educational purpose and want to setup a redirect on a sub-domain of that domain to an existing site using bulk redirect. What DNS setting do I need for that domain in order for the bulk redirect rule to perform the redirect on the test sub-domain?
If you want all sub-domains that does not already exist in your DNS configuration work that way, then yes, that would be the correct one.
A potential limitation you could end up on seeing with:
AAAA | *.example.com | 100:: | Proxied
DNS with a wildcard like this will make any record below .example.com (that does not already exist) respond in DNS, even with multiple levels, such as e.g. spaghetti.test.example.com.
Wildcards in SSL/TLS certificates covers only one level (e.g. test.example.com, and spaghetti.example.com, but NOTspaghetti.test.example.com).
So https:// won’t work for multiple levels of sub-domains, unless you obtain certificates matching those, for example through the paid add-on Advanced Certificate Manager (ACM).
BTW, domains like e.g. example.com, example.net and example.org are standardized as example domains, such as for use in e.g. documentation, and, like in your case if you are not actually sharing a real domain name.