Flying from Munich to Nice with arrival at 6:40 p.m. Considering time for customs and more interested in Marseille/Avignon/Arles/Orange shall we stay overnight in Nice or proceed by train or car west from the Nice airport?
You don't say when you're traveling (so daylight is one issue), or how much time you're budgeting for your time in Provence.
Assuming you're going to be spending more than one or two days in Provence, I'd suggest reserving a hotel room in Nice and getting organized for your ground travel in Provence. You have much more flexibility by car than by train. So, I think if you get from the airport to a hotel in Nice, you can have a good dinner and stroll through the old town (again, depending on the time of year) and then pick up a rental car in the morning and be on your way. Or train to Marseilles, visit there and pick up a rental car there.
Customs?
Maybe consider Nimes as a base; there's a lot to see there. It's a couple or three hours west of Nice.
If you decide on a more eastern base, consider Aix.
Marseille is a bit south for day trips to the rest of the Rhone area.
Yes, customs. Schengen only covers passport control. Customs is still up to the individual countries.
That said, it's rarely enforced.