Let's discuss the two different conceptions of fiction.
The domestic novelists of the mid 19th century believed the purpose of fiction was to improve the religious and moral aspects of society. See line 33: "It was not uncommon for the same multipurpose book to be indistinguishably a novel, a child-rearing manual, and a tract on Christian duty."
Jewett's writing embodied a different view of fiction. In the "high-cultural" conception, fiction is seen as pure art with "value in and of itself" (line 39). Jewett did not believe her work needed to have a social impact, such as promoting good motherhood or religious values.
It is important to understand the distinction before turning to the answer choices. B, D, and E are easier to rule out.
B) The differing conceptions of fiction have nothing to do with urban vs. rural. D) We know that Jewett and the domestic novelists focused on women, but the segment of the passage discussing views on fiction do not give us information about why they chose to write about women E) There is nothing that suggests Jewett was unable to write about women and religion. Rather, she chose not to.
This brings us to A and C. I can see why A was a tempting answer. The difference between the two is small. It comes down to "Unwilling to feature children and religious themes" vs. "Not constrained to feature children and religion." Which of these do we have more evidence to support? We don't know much about if or why Jewett was unwilling to write about child-rearing and religion. What we do know, is that her conception of fiction meant that she didn't have to. This is why C is a better answer than A.