Definitely data compaction.
It's a give away when it mentions multiple 1KB and 2KB files and then you think about the 4KB block size and how much is wasted.
"While the data is still in the controller memory, we take data chunks that would each normally consume an entire 4KB block on physical storage and we compact the chunks. With compaction, more than one chunk fits into a single 4KB physical block."
https://community.netapp.com/t5/Tech-OnTap-Articles/A-Look-Inside-NetApp-Inline-Data-Compaction/ta-p/122362
https://www.netapp.co.uk/company/newsletters/tot-a-look-inside-netapp-inline-data-compaction-1608.aspx
Compression makes no sense as it's already compressed by ZIP. Dedup also no sense cause no blocks are duplicate. Therefore A is the only logical answer and runnerbean has stated the feature very clearly.
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