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The latter. You write your shared libraries in Kotlin, compile it for multiple runtime targets, then call your Kotlin code from whatever runtime you're using.

You can work in whatever way makes sense for you to share code.

Kotlin allows you to call native code (JS/C/ObjC/Java/WASM) from Kotlin, or you can call Kotlin functions from native code (JS/C/ObjC/Java/WASM). So you choose on what level you want to create shared code.

So it is quite flexible so it is up to you on what level you want to share code. It can either be a low level library, a middle level library. And with maturing Jetpack Compose it is possible to build the whole app including UI multiplatform without leaving Kotlin.

Write your business logic in Kotlin with Kotlin libraries.

Write your UI in Js/Android/iOS.

It is also possible to write the UI in Kotlin cross platform with Compose Multiplatform.