I think it's a mix between 1 and 2. Eradication is unrealistic. But the optimum is _not_ the point where every last hospital bed is used. It's where the balance between lockdown and infections is the most societally acceptable.

That is, we want to minimize infections, just not at all costs (to society/economy/...). And similarly, we want to minimize impact on society/economy/..., just not at all cost (to health).

Keep in mind that every infection bears a risk for long time health impact or short term (death), no matter if a hospital bed is available or not.

Finding this compromise is a matter of opinion and therefore a political question. It's not as easy and black-and-white to formulate as it would be to say whether we do 1 or 2.