This question asks you to pick the answer choice which is an assumption the argument depends on. This essentially means you are looking for a premise that connects the premises in the argument to the conclusion. With this type of question, I often find it easier to break the argument down into its component parts.
Premise: A folktale is a traditional story told in an entertaining way making some think they lack meaning. Premise: Folktales are passed down through generations and provide great insight into the wisdom of the culture. Premise: ?? Conclusion: Folktales have meaning.
Answer (A) is incorrect because it doesn't add anything to help support the argument. We already know that folktales are passed down through generations and therefore provide insight into the wisdom of the culture. This answer choice just expands this idea to apply to all stories not just folktales.
Answer (B) is correct because it connects the premises and the conclusion. The premises tell us that folktales provide insight into the wisdom of the culture, and the conclusion tells us that folktales have meaning. This answer choice connects these two ideas and allows the conclusion to flow from the premises.