In general, if you do 2 or 3, then you don’t need 1.
With option 2, you just set the DNS server IPs to that of AdGuard. But you don’t have much control over what’s blocked.
With option 3, you need to check the “Ad Block” checkbox on the profile, and the router will apply a default block list (https://github.com/pcwrt-router/Adblock). You can add domains to the white list to bypass the default block list, and you can add domains to the black list to block additional domains (append !A to the domain name to indicate an Ad block instead of a normal block). For example, to block ads.example.com as an Ad domain, you’d enter ads.example.com!A.
With option 3, the router will report the number of ads blocked for the day for the device you are using. And you have the option to pause Ad blocking for the device you are using, with the ad block control page (in case some web site doesn’t work with ads blocked).