Using options to improve portfolio risk/returns

During the past few years, one focus of the equity derivatives market has been capturing volatility returns and using them for portfolio diversification or yield enhancement, i.e. ‘volatility as an asset class’. But what does volatility as an asset class mean? The term is frequently used, but appears to have various interpretations:

1) capturing historical excess returns by selling volatility;
2) the use of long volatility instruments to hedge portfolios; or
3) various relative-value strategies involving combinations of option positions.