Oh, I definitely meant that a manager could see the details for all of those in the position / organisation below theirs. I would ideally like the same cascading arrangement for "manager" as there is for "position" and "organisation" (i.e. not just direct team but indirect team), but I know that's a bigger question for all of the report sources rather than just this one.
I can indeed see that option 2 wouldn't make sense, fear not!