The first option is fast and is suitable for most cases. To create an archive there are also several options: archive with standard settings, or manual configuration of all parameters of the archive.
If there are other files in the current folder, it is better to unpack into a new one, as the files are mixed. You can extract files from the archive to the folder of the same name or to the current folder. From here you can unpack the archive and create a new one. 90% of the interaction with the program functions is usually done through the context menu (right mouse button).
Supports all popular formats, is built in the context menu and has wide settings of created archives.
WinRAR is a program for creating and unpacking archives.