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There is something I find myself doing often while writing, and I don't even know what to call it, but I would like to know if its good practice. It happens when I'm writing from a third-person perspective. It's where the narrator begins to describe something based not on truth, but on a character's (potentially skewed) perspective. Here's a random example:

There is a peaceful alien race that has never done anything bad to humanity, however John falsely believes that these aliens killed his father, however the reader knows that this is not true, his father's death had nothing to do with the aliens. So the reader knows these aliens are innocent, and when John is saying bad things about them the reader will disagree with him. There are two ways I could narrate this

1: the 'plain way'

John thought to himself 'Those wretched slimy creatures! I hate them!'

or 2 is the way I'm asking about (that I don't really know what to call)

John thought about how much he hated those wretched slimy creatures.

Obviously those 'wretched slimy creatures' are not as bad as John makes them out to be, and the reader and narrator both know this. Is it a good idea to have the narrator describe them as 'slimy wretched creatures' when describing John's opinion of them, or just to use the 'plain way' by not even appearing to adopt John's view and just tell it like it is. Personally I prefer way 2, because it makes it more interesting and less plain, but I don't want it to seem like I'm contradicting myself.

This depends on the narration. If you have a third person omniscient narrator then they usually would describe things in a fair and even way. Most modern writing through does not use an omniscient narrator. Most writing is done in third person limited.

In third person limited the camera stays consistently over a specific character's shoulder for often at least a chapter if not the entire novel. In this case the narrator should absolutely take on the characteristics of the character being followed by the camera. All descriptions should be done through the lens of that character. All his knowledge and prejudices should be applied to descriptions. If it a character would not know what something is, the narrator should describe it in that way. Explain how the character sees the object, not what it is by name. If the character has beliefs the narrator should have the same beliefs about the concept.

This is often a great tool if the camera ever moves to another character. The same things can suddenly be described in completely different ways. This can give the reader a great depth into not only your characters but also the setting.

This is called "close third-person" POV. It's kind of a hybrid where you present the world in the third-person, but from the perspective of a given character (as you would do in first person). It's a common technique, and one that is perfectly fine to use. The major warning is that you need to be cautious if you are switching back and forth between this and third-person omniscient, or if you switch POV characters, because either switch has the potential to confuse your readers.

I think I can see what you are asking but I'm not sure.

Narrators can take on the bias, prejudice or thoughts of a character. The most obvious example I can think of is a poem called 'Southern Cop'. That doesn't mean that the writer holds those views.

Direct speech/thought has a different impact to indirect. I think the first version is much more vivid, with one little correction: you can't really think to anyone other than yourself.

Jane Austin is the master of Free Indirect Speech, a 3rd-person style where the narrative voice becomes the direct thoughts of a character.

It bypasses the "He thought to himself…" and states the character's opinion as fact. From wikipedia:

What distinguishes free indirect speech from normal indirect speech is the lack of an introductory expression such as "He said" or "he thought".

In practice, Austin changes the matter-of-fact "truths" from her narrator so often and quickly that the reader is always aware which character has taken over the story. Their emotional state colors the world that is being described in ways that aren't possible. For example in Emma:

Emma’s spirits were mounted quite up to happiness; every thing wore a different air; James and his horses seemed not half so sluggish as before.

Austin has simple plots but complex characters who are opinionated on just about everything. Her style is usually interpreted as satire, because her characters are generally so opinionated that they get themselves in trouble especially when the characters are naive or plain wrong – however the intimacy of the Free Indirect Speech makes the reader sympathetic to even unlikeable characters. We see their flaws, but we also hear them in their own words as if directly out of their heads.

This essay on Medium goes into more examples how Austin undermines her own narrator to signal the bias to her readers.