To go native means to adopt the behavior attitudes or characteristics of the people of a different culture in which one now lives, which is what the first option entails.
Consider the staetement "Either they adopt the behavior attitudes or characteristics of the people of a different culture in which one now lives or they can be used to produce new faerie children.". Based on this statement, is "Either they go native and forget their former lives or they can be used to produce new faerie children." a true statement? Yes/no/unknown