What applies when you see this traffic sign?

Your selection 1 and 2 is correct.

This sign indicates that the lane rules are relaxed in your direction: you may choose whichever lane best suits your direction of travel (answer 1). In Germany, that’s an exception to the usual “keep right” principle, which normally requires you to use the right lane unless you are overtaking.

It also means “undertaking” is allowed in a limited way: if traffic on the left lane is slower, you may pass it by continuing in the right lane at a higher speed (answer 2). The key idea is that you’re not supposed to weave in and out just to overtake on the right; you may simply keep your lane and go faster if the traffic situation causes different speeds in the lanes.

Answer 3 is wrong because the sign does not change the speed limit. Even on a multi-lane road, you must still follow the general limits (for example 50 km/h in built-up areas unless signs allow more) and any posted speed signs.