The first method you mention will conserve disk space by having only one copy of bzImage (with it's
companion /lib/modules), with a link in /boot to point to bzImage.
The second method offers more versatility, by allowing more than one version of the kernel (each
with it's own /lib/modules), but uses much more disk space because there will be more than
one copy of bzImage and more than copy of /lib/modules.
If you have plenty of hard disk, but not much ram, you may want to compile several copies of the
kernel, each with it's own set of capabilities (but much smaller) , and each with it's own /lib/modules,
for special purpose work, or different hardware setups. Or, you may want to try the latest and
greatest test kernel, along with a tried and true kernel, at the expense of hard disk real estate.
But that's it in a nutshell.