The Cinematic Universe appears to be using a slightly different technique than the mainstream comics universe, so it depends which Ant-Man you're talking about.
In the comics, Hank Pym's Pym Particles work by interfacing with a parallel dimension (the Kosmos dimension) and shifting mass back and forth between the two dimensions. When an object shrinks here, it's extra mass is shunted off to Kosmos, and when it grows here, the extra mass is pull in from Kosmos.
Fairly early on in Ant-Man, Hank explains that his Pym Particles work by "changing the distance between atoms" in the affected substance, basically your bullet point #2. Since there is no loss of mass, the object in question also becomes more dense as a result of the shrinking.
On a side-note, there's a bit of a problem with MCU explanation. According to the movie, it's possible for Pym Particles to shrink a subject down to the level where quantum effects become significantly meaningful. This would require getting down to around the size of a single atom, or possibly smaller, depending on how "quantum" you wanted to get. Obviously, it's impossible to move two separate atoms closer together than the size of one atom, as this would violate the Pauli exclusion principle. (When this kind of thing happens in the real world, e.g. due to extreme gravity, it's called "degenerate matter" and all kinds of major nuclear changes happen to the matter, and it no longer looks or acts like it's original form.)
It's likely that this is just your typical "close enough for the masses" movie physics, but it's also possible, based on some hints from Marvel about the upcoming Doctor Strange movie, that Pym Particles are more involved than even Hank knows about.