Can folding rules be applied to Normal Text?
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Do I need to use UDL or a lexer? Which is closest to Normal Text?
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Normal Text has no folding rules available. You would need to use a lexer of some sort, whether a builtin or a UDL.
A UDL is “closest” to Normal Text, in that it won’t highlight any text unless you explicitly tell it what to highlight. So then you could just define a FoldingUDL with Folding rules (no styles applied to the folding keywords), and no other keywords defined, and it would be essentially Normal Text + Folding.