How Terraform connects to PAN-OS

Terraform is agentless, it uses the local machine to execute the changes required to the target infrastructure, as opposed to instructing a remote machine to execute the changes. The target infrastructure when using Terraform for PAN-OS is the NGFW or Panorama; Terraform sends the required commands to the NGFW or Panorama using the PAN-OS APIs. For this reason, you are required to supply the PAN-OS provider with details of your NGFW or Panorama connectivity and administrative credentials. More details can be found here.