The main problem with option 1 is that it may limit the audio output from the TV. Most TVs do not pass DD 5.1 from external devices, a very small number pass DTS, and none do lossless dts-MA, TrueHD, or multichannel PCM. While you list a DVD player as a component, presumably you will get Blu-ray instead. The vast majority of BDs have dts-MA tracks and you'd be limited to stereo if you run the audio through the TV. (If you really are only planning to watch DVDs and satellite TV and if you get a TV that passes DD 5.1 from HDMI inputs, then option 1 is no worse than option 2 with regard to audio.)
Stereo audio is the reason most people use their receivers as switching hubs rather than their TVs. Regardless, though, if your set has Smart TV apps or you use an off-air antenna or direct cable feed, you'll need to run a digital connection for audio from the TV to the receiver. It can be either optical or coax (both are the same) or you can use ARC over the HDMI cable feeding video from the AVR to the TV. Both devices must support ARC and have HDMI CEC engaged. Even then, ARC can be a bit flaky. In some systems, the optical or coax output supports encoded 5.1 while ARC does not. So, you need to read the manuals carefully to figure out which approach is better in your situation.
The main potential advantage of running HDMI from the devices to the TV is on the video side. That only comes into play if you need different video settings for each device. Even then, the AVR may be able to handle the video processing so that a single HDMI feed from the receiver to the TV will be OK. Most people don't see a need for different video settings and are fine with using a single HDMI connection for video.