Downmix is basically converting either HD audio to 5.1/2.1 surround or 5.1 surround to 2.1. Passthrough is decoding the input audio either HD/surround/2.1 and sending it to the speakers to output it. And your doubt depends on what you input. Like,
2.1 cannot be further downmixed (here, your first option is not valid)
5.1 can be passthroughed or downmixed to 2.1 (here passthrough is better)
HD audio can be passthroughed or downmixed to 5.1/2.1 (here also passthrough is better.)