Is this project going to be a standalone sequel or a DLC?

Last I heard it will be stand-alone and not a DLC as such; however we will be able to import our characters from the main game into it (I assume via a save from the end or something).

The developers just talked about it here. They say it will be a a expansion like throne of Baal was to Baldur's Gate 2 but it looks like it is a stand alone game. So I guess it connects directly, story wise to Atom, can be played and installed like a separate game, but allows for importing your character from the previous game.

https://twitter.com/atomrpg/status/1251555883542339586

It will be separate game with its own installer, connected to original Atom story and allowing to import character from it.
Seems to me it has many changes to gameplay and game mechanics, so it was impossible to squeeze it as DLC into original game without ruining it. It's just my guess and we'll see.

It does seem like it's going to be a lot larger than anyone expected initially.

Strangely enough it's going Early Access for a fair while, just like the first game. Which is strange, since they surely got a ton of feedback from ATOM to use, without requiring even more? And besides, it seems like the best stuff was added in post-release patches anyway (making this one of the best-supported games along with Age of Decadence - actually surpassing AoD since they added a massive amount of content post-release).