That's also how I've seen it done. But that's not so different from the nullable optional approach. It's still effectively two flavors of null.

What I'm wondering is how people who have an issue with different representations of absence would approach (or avoid?) situations requiring them.

Larger enums to represent and discriminate. Null is just syntax sugar for the one-kind of absence case, and multiple-null-likes eliminates all benefits of that syntax sugar, so you might as well revert to a real discriminator.

Ideally you can force the use of the discriminator… but that depends on your type system

The problem with flattening the two absence cases into an enum is composability and generality because it forces the "outer null" case to intrude into concrete types. Say you have a key value mapping Map<String, T> and you represent changes to this map as Map<String, Option<T>>. One day T itself is Option<Int> so you end up Map<String, Option<Option<Int>>. If you want to use e.g. Option2 for that latter case you lose generality.

Where the "double absence" issue comes up in practice, it's usually in a context where it does make sense to represent and handle the first type of absence separately from the second type.