Connecting two "USB C" hosts, what happens?
The answer depends on whether the host ports are regular host ports, or "Dual-Role Ports" (DRP), at least one of them.

If both ports are regular host ports, nothing will happen, so (1) is true. (because both ports will have pull-ups on CC pin, and this will not trigger any host reaction, VBUS will not be asserted).

If one of the ports (like in some modern tablets/phones) is DRP, the DRP port will alternate its CC function trying to pretend as host, then as device, and so forth. Depending on the other port, right connection will be established. So the answer is (3). 

If both ports are DRP, the (3) is still true, just the role of devices will be determined at random, depending on cable plug-in time relative to CC cycle.

These are SPECIFICATIONS for the Type-C connector.