The one you choose is up to you. It doesnβt matter, anyway, at least with respect to your tools.
The first option means that all the files will be in the root directory of the project (usually PATH_TO_WORKSPACE/projectName ). Your .java and .class files will be here if you select this option. The second option will create PATH_TO_WORKSPACE/projectName/bin and PATH_TO_WORKSPACE/projectName/src . Your source files will be in /src , and your compiled files will be placed in /bin .
My personal preference is not to use the project folder as the root for source and class files and create separate folders for source and class files. However, it is all up to you.
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