The second is closer to the modern scientific definition. And the part that’s problematic is “tested by further observation”. You’ve given a pretty vague analogy that can’t be (reasonably) tested because it isn’t really a full fledged idea. I can ask something like “what if dark matter is made of the souls of the damned” but unless I present a clear idea of what that means (clear enough to obtain potential effects) it’s not really science in the modern sense.