Must the Artillerist Artificer’s Tiny Eldritch Cannon be carried in their hand?

The Artillerist Artificer has the ability to make Eldritch Cannon(s). The rules for the cannon state that you can make two different sized versions of it:

you can take an action to magically create a Small or Tiny eldritch cannon in an unoccupied space on a horizontal surface within 5 reet of you. A Small eldritch cannon occupies its space, and a Tiny one can be held in one hand.

The wording is a little vague. Do the rules mean that the tiny version:

  1. Doesn’t occupy a space, therefore must be held in the artificer’s hand
  2. Can be held in one hand, unlike the small version, but otherwise functions like the small version with regard to space and movement if it is not.