D. State file.
The default "local" Terraform backend stores the state file on the local disk of the machine running Terraform. The state file contains information about the resources managed by Terraform, such as their current state and any dependencies between them. When running Terraform commands, such as terraform plan or terraform apply, Terraform reads the state file to determine the current state of the resources and what changes need to be made to reach the desired state.
https://developer.hashicorp.com/terraform/language/state
Terraform must store state about your managed infrastructure and configuration. This state is used by Terraform to map real world resources to your configuration, keep track of metadata, and to improve performance for large infrastructures.
This state is stored by default in a local file named "terraform.tfstate", but it can also be stored remotely, which works better in a team environment.
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