What is the right personalization approach on AEM using Target?

While looking at documentation for personalization on AEM using Target, I can see 2 approaches:

1. Import experience fragment variations into Target console and create an offer with it to replace HTML sections on the page (https://experienceleague.adobe.com/docs/experience-manager-learn/aem-target-tutorial/personalization-use-case-1.html?lang=en)

2. Use AEM targeted mode on the component and define variations on the component itself but use Target as the personalization engine (https://experienceleague.adobe.com/docs/experience-manager-64/authoring/personalization/content-targeting-touch.html?lang=en#authoring-targeted-content-using-targeting-mode)

I can see that the 2nd approach has the advantage of configuring personalization from within AEM while also allowing authors to easily identify which components are personalized. From a performance perspective as well, seems like its best to have the content in AEM and switch it based on conditions defined in Target (approach 2) rather than getting the HTML (imported from experience fragment) from Target and replacing on the fly (approach 1).

With that understanding, I am wondering why approach 1 seems to be popular or why 2 is not called as a preferrerd approach? Does anyone have pros and cons for both approaches and recommendations on which approach should be taken?