My personal preference is definitely #1. I tend to steer clear of adapters of any description since they introducte another point of potential failure in the audio connection chain.
A "pad", in audio terms, is an electronic circuit (a special arrangement of resistors forming a so-called voltage divider) which reduces a signal voltage by a specific ratio. They are specified by the amount of attenuation (signal reduction). So, a pad of -20dB will reduce an input signal by a factor of 10. eg 10 volts rms in, 1 volts rms out.
A pad can be designed into equipment. Many microphone pre-amps, for instance, have an input pad which can be switched in or out to help tame very hot inputs. Otherwise, you can buy or build stand-alone pads which are built into something like an xlr connector. These can be called "in-line attenuators" or similar.
Paul