Orientation of the house on the property - fewer retaining walls?

I don't really believe in the construction as shown

It's just a sketch.
This is how it goes:
Remove soil, construct reinforced concrete walls on level -1 with foundation, frost protection, and drainage for the house, insulate the hillside side and backfill. The garden-side energetically decoupled wall does not need to be insulated and does not have to be concrete. Structural calculation is indispensable. Costs similar to basement construction.

Our wall also goes in three parts
Old sandstone wall 3m (without foundation)
House wall WU concrete insulated on both sides
Garage wall up to 5 meters high (concrete, foundation unknown) now garage attached

Everything new as Hampshire wrote.

I'm for the wide variant A

If you plan to slope off, include a slide and an access to the garden

Thank you very much for your suggestions. How and with which material we support is not yet clarified. Forgot to mention that we are building a high energy class, in case that is important.

I have also sketched you 2 pictures, which show the variants "from behind". (No scale, just quickly by hand) This may make it clearer how it could look. We always get access to the garden from the right side / left would also be possible in terms of space. The plan is to partially integrate the garage anyway, no matter the position.

If we only put a retaining wall on the left, there is no space for garden tools etc. (or we would have to cellar a part behind the retaining wall - basically extend the cellar behind the house). Garden shed is ok - but if you can integrate it, I would find that better. I also think we would then have to install a railing or flower boxes on top to secure it.

If we partially integrate the garage on the left, we would immediately have a cellar underneath. But how much do we shade ourselves with that? Would we then have to build a longitudinal version?

The question that is still not clarified and very important to us, on which the upper floor also depends, is the position of the kitchen. What do you think is better in terms of sun? What is the better location? How would you decide? Would you do it as drawn or differently? Which variant do you like better and why?

Your drawings are wonderful and have a very charming style! I prefer the upper version because it doesn’t place such a big chunk of wall on the terrace. The garden tool shed can also be placed at the other end of the garden (lay electricity) or as a "cabinet" – thus no longer considering the 3m distance on the north wall.

Super drawing

The upper version
Below looks like a backyard

The idea behind it was that the terrace would then not be so visible from the street. One would have a more sheltered setting. From the house wall to the retaining wall, we could still have 7m distance.

Is the kitchen okay for you if it is on the northeast side and not in the south? One could also do the upper option and still place the kitchen facing south? Although facing the large garden is not so bad either.... Decisions, decisions ;)