Legally, at least in the U.S., it's (b), to be seen by other vehicles. The primary regulation for bicycle headlights usually specifies the minimum distance at which the light can be seen by others, and doesn't require any particular distance at which the light illuminates the ground.

These regulations date from the era of dim incandescent lights driven by tire-dragging generators or a couple of flashlight batteries.

Today, there are lots of lights on the market that do (a) quite well, and in doing (a) they're usually pretty good at doing (b), but many of them also do (c).

Bicycle headlights are far brighter today than car headlights were when automotive beam patterns were regulated for safety, because of the glare hazard to oncoming traffic. Car headlights were still sealed beam incandescents in the 5-600 lumen range when the danger of headlight glare was regulated.

These days, you can get 1,200 lumens for under $50, but most bicycle headlights have terrible beam patterns that throw far too much of the light above horizontal. They'd be illegal on any other class of vehicle, but legislators haven't caught up with bicycle lighting yet.

Likewise, strobing headlights are illegal on bicycles in a few states, such as Washington, but many other states ban flashing headlights on all other vehicles, but not on bicycles.

When a bicycle headlight was dimmer than the parking lights of a car, who cared whether it was well-aimed or flashing? Now that bicycle lights are as bright as car headlights, and the average motorist is getting older with more vision issues, expect legislative attention to (c).