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Source: https://writers.stackexchange.com/a/6086
License name: CC BY-SA 3.0
License URL: https://creativecommons.org/licenses/by-sa/3.0/

I would go with option 2. However, you do not need to manually build the structure. I instead recommend using a tool such as [Tree](http://mama.indstate.edu/users/ice/tree/) which should handle the pretty-printing for you as below:

    $ tree -d /var
    var
    |-- backups
    |-- cache
    | |-- app-install
    | |-- apt
    | | `-- archives
    | | `-- partial
    | |-- apt-xapian-index
    | | |-- index.1
    | | `-- index.2
    | |-- cups
    | | `-- rss
    | |-- debconf
    | |-- dictionaries-common
    | |-- flashplugin-installer
    | |-- fontconfig
    | |-- hald
    | |-- jockey
    | |-- ldconfig [error opening dir]
    | |-- man

The script should be available as a package in your distro. I can confirm that it is in Ubuntu.

I also suggest that you contact your editor to get his/her opinion. The publisher very likely has its own style guidelines for such matters (with layout in mind). If you do go ahead with a text representation, I recommend that you add a sticky somewhere reminding you to check the indentation in the final - whitespace often gets messed up when the book is laid out.

P.S. ... and your editor will prefer a textual representation as well - saves ink ;)

Original score: 8