Explanation
IS-IS is an interior gateway protocol that uses link-state routing to exchange routing information among routers within a single autonomous system. IS-IS uses two types of addresses to identify routers and areas:
system ID and area address. The system ID is a unique identifier for each router in an IS-IS domain. The system ID is 6 octets long and can be derived from the MAC address or manually configured. The area address is a variable-length identifier for each area in an IS-IS domain. The area address can be 1 to 13 octets long and is composed of high-order octets of the address. An IS-IS instance may be assigned multiple area addresses, which are considered synonymous. Multiple synonymous area addresses are useful when merging or splitting areas in the domain1. In this question, we have a network based on IS-IS with four routers (R1_1, R1_2, R2_1, and R2_2) belonging to area 0001. The area address for area 0001 is 49.0001. The NSEL byte for area 0001 is the last octet of the address, which is 01. The NSEL byte stands for Network Service Access Point Selector (NSAP Selector) and indicates the type of service requested from the network layer2. Therefore, the correct statement in this scenario is that the NSEL byte for area 0001 is 01.
References: 1:
https://www.cisco.com/c/en/us/td/docs/ios-xml/ios/iproute_isis/configuration/xe-16/irs-xe-16-book/irs-ovrvw-cf.
2:
https://www.juniper.net/documentation/us/en/software/junos/is-is/topics/concept/is-is-routing-overview.html

BGP Layer 2 VPNs use BGP to distribute endpoint provisioning information and set up pseudowires between PE devices. BGP uses the Layer 2 VPN (L2VPN) Routing Information Base (RIB) to store endpoint provisioning information, which is updated each time any Layer 2 virtual forwarding instance (VFI) is configured. The prefix and path information is stored in the L2VPN database, which allows BGP to make decisions about the best path.
In BGP Layer 2 VPNs, each site has a unique site ID that identifies it within a VFI. The site ID can be manually configured or automatically assigned by the PE device. By default, the site ID is automatically assigned based on the order that you add the interfaces to the site configuration. The first interface added to a site configuration has a site ID of 1, the second interface added has a site ID of 2, and so on.
Option D is correct because by default on PE-2, the remote site IDs are automatically assigned based on the order that you add the interfaces to the site configuration. Option A is not correct because by default on PE-2, the site's local ID is automatically assigned a value of 0 and does not need to be configured to match the total number of attached sites. Option B is not correct because you do not need to create a unique Layer 2 VPN routing instance for each site on the PE-2 device. You can create one routing instance for all sites within a VFI. Option C is not correct because you do not need to use separate physical interfaces to connect PE-2 to each site. You can use subinterfaces or service instances on a single physical interface.

A sham link is a logical link between two PE routers that belong to the same OSPF area but are connected through an L3VPN. A sham link makes the PE routers appear as if they are directly connected, and prevents OSPF from preferring an intra-area back door link over the VPN backbone. A sham link creates an OSPF multihop neighborship between the PE routers using TCP port 646. The PEs exchange Type 1 OSPF LSAs instead of Type 3 OSPF LSAs for the L3VPN routes, which allows OSPF to use the correct metric for route selection1.