A 60-year-old patient is diagnosed with lung cancer and staging using the TNM classification system. Upon assessment, the primary tumor (T) is classified as T2, regional lymph nodes (N) as N1, and no distant metastasis (M0). What does this classification suggest regarding the cancer's characteristics and potential treatment options?

The tumor is small, regional involvement is significant, and metastatic disease is present.

The tumor size is approximately 3 to 5 cm, with limited regional lymph node involvement, and there is no distant spread.

The tumor is large with significant local spread and involvement of distant organs.

The tumor is very small, local nodes show extensive involvement, and the cancer has metastasized to distant organs.