We have a specific line reference in this question, and while that does not mean that out understanding of the rest of the passage isn't important to this question, we should probably focus most on the second paragraph and the immediate context of line 21. In the context of the broader passage, the second paragraph serves to give an example of a case where literacy did not have the degree of democratizing effect that some scholars who the author's opposes claim it did.
We are told that the development and sharing of a written law code became mythologized as a great democratic event that broke the power of the old aristocratic rulers. From this mythologized understanding arises the tradition of the "law giver." We can understand the law giver to be the person who developed and promulgated this law code that some scholars have claimed to be a great democratic event. The author then notes that the creation of this law code was not that democratic as the interpretation and enforcement of the laws was still done by the elites.
The question asks what effect the author hopes to achieve by categorizing the law giver tradition as one born of mythology. From out understanding of the second paragraph, we can say that the author is trying to cast doubt on the way that people think about the importance of legal codes and law givers in the development of democracy.
A does not relate to the passage, we are not concerned with greek literary tendencies. B is the opposite of what the author wants to achieve. They are arguing against the importance of law codes, and b argues for their importance. C is irrelevant as we do not care so much about what Athenians though, just about contemporary scholars D matches out understanding well. Although we would have expected to see something about democracy, the process of increasing democracy is also the process of diminishing aristocratic power, so d is correct. E goes way outside of the scope of the passage, we do not know anything about the broad context of greek mythology. This answer also uses the word mythology differently from the passage. The passage talks about one event becoming distorted, E uses mythology to refer to all of the myths and stories of the Ancient Greeks.
