The idea behind extra armour is to represent the formations which may, or may not, depending on interpretation, have worn armour. Yes its more expensive, but in the case of a large war band, its good value. It also saves fiddling about with combined formations and keeping track of who has armour in a unit and who doesn’t.
The rule has also been used in some army lists to give additional armour which may again, represent better armoured nobles, or the wealthy, taking a front seat in the fighting.
Where we are pretty sure armour was used, troops have access to the kit at the recommended points value
In the two options you mention, the units can take the Extra Armour in addition to the other armour, thus improving their armour save still further which exponentially is much better and as noted we don’t know if they had it or not (or perhaps not sure how to interpret it in game terms) so there is an extra price attached, if you want that extra upgrade (or historically, had the coin to buy the stuff in the first place! 🙂
Hope that helps – thanks Rob