Source 1 is correct, every LDP neighbor will receive the chosen Label. The main reason is, that "upstream" or "downstream" are only making sense from a routing perspective. You need to know from where to where traffic is routed to define up- and downstream.
LDP, however, has nothing to do with IP routing, except that a label is chosen for every prefix in the IP routing table (except for BGP entries).
It would have been much more complex to first calculate f.e. in OSPF, whether the LDP peer could potentially need the label.
The design decision was to decouple LDP and IP routing.
Labels are sent to every neighbor, which will decide the label to use for a certain prefix from its own IP routing table. Simple rule: use the label from your current next hop calculated by the IP routing protocol.
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