Kyle may want to leave the team as he won't be on the field for important games with City. From what I've seen, Guardiola thinks of him as a good substitute. I think he's too successful to want to be a substitute. So if he goes to Bayern, he will prove to the competition that he exists again. If he stays at Manchester City, he will continue as a substitute.
Kyle Walker is a crucial defender with good run-up speed, he was once an important player valued by Pep Guardiola but with the presence injuries cases, I don't think he would be able to earned his place in Guardiola's XI any longer, Manchester City have fantastic players with outstanding performances, they're always ready to grab the best results from gamed. The Bavarians interested in the englishman, I think now is the best time for Kyle Walker to triggered a move to the bundesliga giant, he would probably find his peak back but only if he put in the work.