It's the latter. The JSON encoding example is actually a really bad example for this language because there is a huge class of JSON which it cannot easily be seen to encode, though you can probably make some exceptions. An example of the many undefined things would be:

    {"abc def": ["123 456", 789, 101112, null, false]}

A better DSL for JSON would have to include actual data types or so,

    obj
     abc def
      arr
       str 123 456
       num 789
       num 101112
       null
       bool f

...or so.