I searched for this a lot and did not find any useful answers. So had to experience it myself. Posting my experience here so that it can help others ^
Details and application here https://evisa.rop.gov.om

You can apply for Evisa from ROP (Royal Oman Police) website for 5 OMR ( 26N Tourist Visit Visa ) valid for 10 days. So enough time for sight-seeing or a quick visit if you are only transiting. Indian citizens (and not a resident of GCC) with a valid Schengen visa or a valid visa to one of the following countries (USA, UK, Canada, Australia or Japan) can apply (I qualified here). It is a quick and painless procedure online. You have to upload your photograph, passport and the Visa of any of the countries listed above. The processing time is 2 days. It took 3 days for me as there was a holiday in between. Visa must be used for entry to Oman within 1 month of grant. You must have a valid hotel booking in Sultanate of Oman and a return ticket. Unfortunately I had applied only 1 day before my trip so could not use the approved visa which was emailed to me. I would recommend applying 5 days before date of travel.

You can also buy this visa at the airport transit area before immigration and this is what I did. The cost then is 6 OMR. They just asked me if I have a Visa to any of the countries listed above. Did not ask about hotel booking or flight details. The whole process was over in 2 minutes. You need to have OMR with you for payment. Not sure if there was any ATM nearby.

You can take a taxi outside the arrival to visit the city.