All that does is stop the automation from running. So if you had it set like that when the automation triggered it would also stop and you would have the time delay to then turn OFF like a 1 shot.
It would be the same if you put the light in bypass option 1 but I wouldn’t recommend that. You could use a toggle helper if you like in option 1 and then use the bypass auto OFF in X time. Turn ON the toggle helper that turns ON the light keeping it ON and then it turns the toggle helper OFF for you that will turn the light OFF if the motion sensor is clear or once it becomes clear so your not in the dark.
So I have a 
Bathroom Humidity Exhaust Fan blueprint that has an automation link. I use that when having a shower and it keeps the lights ON. You should be able to get everything working perfectly.
I also have a 
Manual Control Status Tracker blueprint that you can use so if you manually turn ON the light in the UI or by the switch it will toggle a toggle helper and you then use that in the bypass not the light. It also has a auto OFF for you.
Blacky 