We assign 192.168.3.1 as the IP address of the proxy machine in the internal network. You could use any other (local) IP address, you should need to make sure that you assign DHCP addresses in the same subnet in
When you invoke mitmproxy it should show up, other than that you need to add a client to view traffic.
This is unrelated of the virtualization technique you are using, see http://docs.mitmproxy.org/en/stable/certinstall.html.
Check if the proxied machine got an IP address verify in WireShark that it sends packets to the proxy machine.
Yes, proxy and proxied machine are differnt. You can have as many proxied machines in the internal network as you want.
Hope this helps!