Hi,
Since BGP is not redistributed into OSPF and all BGP routes are injected into the forwarding table only at every router that runs BGP (those routes do not propagate), the backbone routers do not have any entries to external networks in their forwarding table. Therefore, the option 1 needs to be activated, so that all routers can have a route in their forwarding table to the external network.
All routers need to support recursive table lookup because the BGP-next-hop of a route learned from BGP may not be on-link. Routers perform recursive table lookup to resolve the non on-link
next-hop into an on-link next-hop. Therefore, the option 2 also needs to be activated.
I hope this helps.
Emi