You should (and probably want to) stay away from the old "Arduino NG and older" option. It was originally made for boards without auto reset, so there's a 10 second delay from hitting reset until you program starts. The bootloader is significantly larger than Optiboot, and there aren't a lot of space.
You should download MiniCore, which lets you use both the internal and the external oscillator, gives you two extra pins if you choose to use the internal oscillator and includes Optiboot. MiniCore can be downloaded at GitHub - MCUdude/MiniCore: Arduino hardware package for ATmega8, ATmega48, ATmega88, ATmega168, ATmega328 and ATmega328PB