I would say the latter would look better and be more accurate just because the circularized areas here would imply that the trees actually do form a clearcut circle around the houses like that in reality, while a rough estimation tracing the canopy of the woods would at least be more true to the actual shape of the woods.

That aside, huge thank you for mapping all this landuse and woods around the Danville area. You've clearly put a lot of time an effort into this project making this area that was just recently completely blank look more colorful and well-mapped.