Originally Posted by
corporate-wage-slave
Absolutely correct. The distinction is between a commercial ticket (these mostly credit) and redemption tickets (which don't credit). So 1 is a redemption, 2 is commercial. In 2 you effectively are using a diffferent "currency" to pay for that commercial ticket. It's usually a poor use of Avios unless there is a special deal on, which happens once a year or so.
I'd have thought it's also a reasonable use of Avios if you go for the lowest option (typically up to 10% off), as this allows you to discount the booking at a 1p/Avios rate (e.g. 5000 Avios for £50 off).