Welcome to WPSE. Your question will likely be flagged and closed soon (out of scope for this site) but…
Knowing that WordPress is a content management system, your content would ideally be editale in the CMS itself. The short answer to your question is “in the editor – your #1 scenario”. The editor supports markup and to avoid extensive rewrites of existing pages, you can simply paste your existing HTML into the editor. Our organization is still using the “classic” editor and has not migrated any of our properties to the new Gutenberg block editor yet, however. We have numerous sites and are just fine NOT using blocks.
Your #2 scenario is done by some developers but the end users are not able to edit the content (easily) this way and the point of a CMS is for end users to easily manage the content. Locking it away in a template is not best practice.
Your challenge will be determining the common header, footer, sidebar areas that can be templated and matching these to the WP ecosystem. If you get stuck in this process, ask a new, direct question regarding your specific problem and you should quickly receive a good, specific answer.