It is about "intention".
In dreams every single detail is crystal clear. You might not be able to recall but you never squint in a dream. One can look around and travel in and out of a scene / story.
Fuzziness is the pain of misplaced spectacles or careless greasy lenses or you are just about to drop asleep with drooping eyes. No control no focus.no agency over this scene with stories (multiple) that the viewer should have freedom to explore.
The only times blur works well is when your scene only has one clear story (singular) and the blur is enhancing it by eliminating distraction. Otherwise it will always risk feeling as censorship for any inquisitive viewer.
Defiantly pick number 1.
We want it all. We want to have the choose our path in the scene. Blur is exclusion. Blur is pain.
... then again, life is pain. Art can/may be pain. Do you want to actively starve your viewer with a your diet view, or a you presenting a grand buffet all you can eat/ see.
\eZ
