Option 2 is how most templates are set up, from what I gather. You can create these tracks automatically for each and every VSTi by right clicking them in the FX window and clicking on the option right below aforementioned one, "Build 16 channels of MIDI routing to this track". Now you can play on your controller's MIDI 1 and the tracks will send it as MIDI 1 through 16, depending on track, to Kontakt to trigger whatever instrument(s) are receiving on this MIDI channel. Option 2: Create a track for each MIDI channel, 16 in total, and have them send their MIDI 1 to the corresponding MIDI channel in Kontakt. If you MIDI controller supports playing on different channels, you can play as well. I've used this option sometimes when I used strings on electronic productions since it was all on one track and very tidy. Option 1: Play them all on a same track/same MIDI clip and switch channels inside the MIDI clip on lower right section of the MIDI editor. Now that you have audio outputs done, there are a couple of ways to play instruments on different MIDI channels. This is done by opening the FX window for the track that Kontakt is sitting on, right clicking Kontakt and clicking on "Build multichannel routing for output of selected FX". You can alternatively let Reaper try and do that for you, but it might mess up sometimes. This is when you add new tracks and create sends form the track that has Kontakt on it to your newly created ones. Okay, now you can add outputs to Kontakt VSTi (this is in Reaper, different from Kontakt's inner ones) by clicking on (X Out) when Kontakt's window is open and adding them so they correspond to whatever you configured (if you have 4 outs in Kontakt, it's 8 channels total, given that you're using them as stereo, so keep clicking + in that menu till you have all 8). Once you have your outputs, you can assign each instrument to a certain output in in the instrument info tab, same place where you have MIDI routing.
If what you need is different, create them yourself by clicking on the + icon, choose number of channels (2 is stereo), number of outputs to add and a Kontakt out at which Kontakt should start routing them, it's usually whatever is right after your "st.1". There are batch options which will let you create an output for every instrument. Here you can configure Kontakt's inner routing by first creating outputs. There's a View icon in Kontakt, which will let you decide what parts of GUI you want to see. You can also reassign them once they're loaded up so that two or more are on the same midi channel - MIDI on that channel will trigger them all. If you're just double-clicking them, by default they'll be assigned to the first MIDI channel available, up to 16 total. Open Kontakt on a track, load whatever instruments you want. nki, so you load them all up and your Violin's articulations are all in one place. And let's say your Violin library has multiple articulations, and each one is in a different.
1 instance of Kontakt with 2 instruments will use less resources than 2 instances of Kontakt, each with only 1 instrument. It's done to preserve resources and to have multiple instruments in one place if you need to configure them (like sections, etc.) and for tidiness.