Transit stop in Helsinki for 21 hours on Finnair

I am an Indian Citizen planning to book my return flight from Oslo to New Delhi. Looking at different options for the connecting flight at Helsinki, there's one connection with a 21 hour layover at Helsinki (arriving at 10PM) and I figured I might take that option and explore the city a bit.

I am planning to apply for a Schengen Short term Visa (C type) with the Norwegian Embassy (where the entirety of my travel is going to be in, except for the return flight when I'm planning to do this).

The application for a Schengen Visa requires that I submit all documents (flight, hotel reservations etc.) and a cover letter detailing my plans. I have everything covered for the Norway trip.

After some Googling, I figured there are a lot of good options to sleep directly in the airport. (https://www.sleepinginairports.net/guides/helsinki-vantaa-airport-guide.htm)

Is this possible? Can I leave the airport while on a long transit stop?
How do I state this plan in the cover letter for my Visa application and indicate that I plan to sleep in the airport (not booking a hotel)?
Is my baggage going to be through-checked during the layover or do I have to collect it and check it again for the last leg?

EDIT:

Technically, I'm having a layover at HEL, but this time, it's a long one. Isn't it like any other layover then?

Pictures about "Transit stop in Helsinki for 21 hours on Finnair"

Transit stop in Helsinki for 21 hours on Finnair - Side view of unrecognizable young man and woman in trendy outfits and backpack looking away while waiting for train in underground station

Transit stop in Helsinki for 21 hours on Finnair - Railway station with clock in classic building

Transit stop in Helsinki for 21 hours on Finnair - Car in a Car Wash

Can you leave the airport during a layover in Helsinki?

If you are travelling within the Schengen area, you are allowed to exit the airport during a layover. Travelers from outside the Schengen area can also leave the airport if they don't need a visa to visit the Shengen area, or they already have a visa that allows a visit to Finland.

Do I need a transit visa when transferring at Helsinki?

No, if you don't leave the airport's transit area. If you have a Schengen visa, you can leave the airport and visit the city.

Can you transit through Helsinki?

Can I transit via Helsinki Airport? Transit is permitted to domestic flights according to Finnish immigration restrictions. Transit is permitted on international flights according to the immigration restrictions of the next transit airport or the country of destination.

Can you leave the airport on a connecting flight?

Yes, you can leave the airport during a layover, provided your passport allows you visa-free entry to the country you're in and you have enough time between flights. In fact, some people intentionally book flights with longer layovers (which are often cheaper) so they get to see a new city.

TRANSFER AT HELSINKI Airport - Finnair Connection Flight at Helsinki Vantaa Airport in Finland

Sources: Stack Exchange - This article follows the attribution requirements of Stack Exchange and is licensed under CC BY-SA 3.0.

Images: Will Mu, Samson Katt, Charlotte May, Helena Jankovičová Kováčová