RE: Rest API GET call JSON format using basic authentication in Dynamics 365
Yes, I understand your scenario - that's why I said what I said.
You said that "Now it is clear to do it in AZURE we have to register in AAD", but that's far from clear. It would be true only if the third-party application required AAD authentication, but you never said anything like that. On the contrary, you're explicitly trying to use a different authentication mechanism than AAD.
It seems to me that you're still confused by the information from Will, which doesn't apply in your case. It would be used if you called F&O API from outside - then you'd need AAD, because F&O API depends on AAD. But you're talking about calling the third-party API, not F&O API.
Regarding your questions:
1) Is it mandatory to provide USER ID while consuming it? No, it depends on the authentication mechanism used by the third-party application.
2) f everything run on Web Server, it should take authentication from IIS App pool? No. as I said you have no control over these things and you can't depend on it. Even the assumption and the web server will be IIS may be wrong.
3) What is the option available other than "Basic Authnetication"? There are many options in general, but it's not really the right question. You want to call an API of a specific third-party application and the question should be what this app supports. If what the app natively supports doesn't meet your needs, you could use some kind of middleware.