I am almost certain it is sight picture 3 for all the M&P's. I believe there was another thread floating around like this. Anyways, I use 3. I believe it is the most accurate.
At what distance?
Out to 25 yards.
My understanding is they are set to Point of Impact, which is your diagram #3
I had the chance to put a bore sight in my 9mm Shield tonight. Would not count on the cheapish bore sight to be 100% accurate... does not account for trajectory, bullet weight, windage, my ability to aim, or the phase of the moon. But between 7 and 15 yards, it looked like #2.
Haven't been able to find a definitive answer. Would be nice if S&W stated in their owner's manual how they DESIGNED these to work. (Even my kid's $25 Crossman pump BB gun had an illustration in the owner's manual for Pete's sake.)
I did find several blogs with PDFs of "US Marine Corps Pistol Manual of 2003". Looks like #2 is what they're using.