The latter is evidence you know what you are doing. And evidence of above average intelligence. Stupid people think they know entire breadths of knowledge - call Peter Principle or Dunning–Kruger: overconfidence is more dangerous to yourself and everyone around you than knowing your limits.
You can NEVER know everything so a heavy awareness of your limits and gaps is critical to being the best you can be. It means you have the _potential_ of operating around the edge of your limits. Realizing your limits (as they exist in the moment) is essential to pushing those limits.
People suffering from Dunning–Kruger have no clue how far over or under those limits they are operating.
This is also related to why you must have grades from A to F in school - you can't know where your knowledge boundary is without breaking it and sometimes failing. You aren't really trying or you are operating in dangerous ignorance.
Another analogy is you can't know the strength of a material without breaking it or reaching its strength limit.