Would say 2 is the closest.
It will always start directly with the execution. How exactly depends on the mode.
If n8n runs in “main” mode, then the execution starts directly in the main process. Obviously depends on the event loop. If that one is blocked, then nothing would happen unless it is unblocked like in any Node.js application. If it is not blocked (as it should be) then many things can run without a problem in parallel and n8n will take as much CPU and RAM as it needs and can get. A single instance n8n instance in “main” mode can normally take a lot of traffic. I would recommend using this one.
If n8n runs in “own” mode then a totally separate process gets started for each execution. So also multiple CPUs get used and if the execution crashes the process for some reason, it does not take whole n8n down. It comes however with the disadvantage that each process takes normally ~1 second to start and will need much more RAM (as almost the whole n8n code gets loaded into memory again for each process).
Hope that is helpful.