Is this plagiarism or just a bad practice?
Referencing your source, but in a somewhat ambiguous way, does not open you to charges of plagiarism.

It's good to want to get this right, and the first example you give is slightly less clear than it could be.  However, given that you have referenced your source right in that paragraph, no one is going to think you are plagiarising.  This is an minor issue of style and clarity; it comes nowhere near academic misconduct.

The repeated references in your second example remove the ambiguity, but they are rather annoying and distracting to the reader (though it is less of a problem in more concise style conventions).

To cite a source for a whole paragraph or section of text, add an introductory sentence and then put the reference there.  

This will make it clear that the source was used for the whole discussion, without needing to repeat yourself.  It also tends to be clearer, better writing in general. For example:


  The blah blah blah website is one example that illustrates this phenomenon (Smith 2010, p. 1-2)  One can use this website to write about various activities and interests such as music, art, science, etc... and one can also get in touch with the founder. However, to use the website, a person has to register and pay a fee. The website founder is known for his IT expertise. More people are joining nowadays than ever...


Or something like.


  Smith et. al. provide a description of the website functionality (Smith 2010, p. 1-2).  One can use this website to write about various activities and interests such as music, art, science, etc... and one can also get in touch with the founder. However, to use the website, a person has to register and pay a fee. The website founder is known for his IT expertise. More people are joining nowadays than ever...