Have applied internally and was told by the recruiter that your current manager is not told until you are expected to get an offer. At that point they alert you to tell your manager you are considering another offer.
Technically the hiring manager can always informally reach out to your manager (I am not doubting this happens), but it is not part of the process.
In the past, your hiring manager has not been able to see you applied to another position. However I heard recently that if you have been in your role less than a year, the manager will now receive a notification. I believe the hiring manager can also see other positions you are applying for, so there is always a chance it can get out that way.