Um, I guess it makes sense after reading it through a couple of times. It seems less than intuitive.
It also doesn’t seem like our site is following those rules though. I’m using option 2 and here’s what the category in question looks like:
So I don’t have the forwarding address configured with the address that’s forwarding the emails. However it seems to be working fine.
For my purposes at the moment I’m all set since it appears to be working (and thanks for your help!) but if you want more details I’m happy to provide more information.