Either of those methods are valid. Mash pH is really the driving factor for how much water becomes too much because that represents where enzyme activity will fall off.
Commercially, both methods are employed, depending on the circumstances of the brewhouse. Most of the time a steam jacket on the mashtun will provide the heat or a tube & shell heat exchanger can be used to just heat wort during vourloff. Hot sparge water can be added in unjacketed systems, often by underletting through the false bottom and letting it get mixed in.
None of that should be confused with necessity. A plain ol' infusion mash with no mashout is used in countless breweries and you'll like their beer just as much as super fancy automated systems.