Support Istio Ambient Mesh

[kimwnasptd]

This is a follow-up from #1103

We are interested in Kubeflow to adopt the new Ambient mesh profile of Istio kubeflow/manifests#2676. Knative is one of the indirect dependencies (from KServe).

We'd like to understand the current status of support of Ambient mesh

[skonto]

Hi @kimwnasptd. Related discussion here.
cc @ReToCode who is leading the Networking stuff (he will be back middle Sep), @dsimansk

[ReToCode]

As far as I recall, Kenjiro (who is no longer active in the project) started the work there: https://github.com/knative-extensions/net-istio/tree/main/third_party/istio-latest/istio-kind-ambient. But we had issues with flaky e2e-tests. I don't think so far somebody took the time to look into it and make sure we can officially support ambient mode. So this work would be up for grabs. Not sure when we'd have time for it, as our resources are quite limited nowadays.