Hi, We need to start by understanding what the passage means, and what the word means in its context. Based on what the passage said earlier about focusing on the folk, we can take this to mean that folklore in its context relates to how it is used, any by who, for what purposes. This also is a pretty clear reflection of what the word context means in general speech.
This is a perfect match for D. No other answer choice comes close to this understanding, and most do not even come close to what the word context could mean in any circumstance.