Option 2. Lives can be good to have, but in some games like Mario 3D Land and Kirby Star Allies, lives are in great abundance, to the point where when you beat the game, you'll have lots of lives left over. Its good to have your lives reset to the default number every time you start the game in Kirby, but Star Allies never resets the counter and I have around 400 or so lives in it because of how easy it is to find extra lives in the levels. This was why it didn't take me long to finish Star Allies, meanwhile in Triple Deluxe and Planet Robobot I was stuck on the final boss(though I did manage to finish the former).
No lives just makes a game too easy. Mario Odyssey has lots of coins in its worlds so you'll likely never encounter a game over screen. And Kirby's Epic Yarn has no way for you to die at all, though you do lose some of your beads when you get hit by enemies.
But in difficult games, those lives mean nothing. I lost thousands of lives and saw the game over screen a lot in Crash N. Sane Trilogy because it was my first Crash experience that wasn't a spin-off game, so naturally, it took me a while to get the hang of the controls. And even when I did get used to them, I still did terribly in the levels because of the enemies and not having any way to protect myself from them. Because of this, I only got through the first 2 levels of Crash 1, skipped over Crash 2, and only made it to the 3rd warp room's boss in Crash 3 before quitting the game for good. And I'm glad I did quit, as I do not want to touch another main series Crash game without the controls being changed up a lot and the difficulty being a lot less stressful for beginners and newcomers to the series to learn and enjoy.