Per the provided reference URL https://docs.splunk.com/Documentation/Splunk/7.3.1/Admin/User-seedconf
"To set the default username and password, place user-seed.conf in $SPLUNK_HOME/etc/system/local. You must restart Splunk to enable configurations. If the $SPLUNK_HOME/etc/passwd file is present, the settings in this file (user-seed.conf) are not used."

According to the Splunk documentation1, to customize a configuration file, you need to create a new file with the same name in a local or app directory. Then, add the specific settings that you want to customize to the local configuration file. Never change or copy the configuration files in the default directory. The files in the default directory must remain intact and in their original location. The Splunk Enterprise upgrade process overwrites the default directory.
To deploy configuration files to deployment clients, you need to use the deployment server. The deployment server is a Splunk Enterprise instance that distributes content and updates to deployment clients2. The deployment server uses a directory called $SPLUNK_HOME/etc/deployment-apps to store the apps and configuration files that it deploys to clients2. To update the configuration files in this directory, you need to edit them manually and then run the command $SPLUNK_HOME/bin/sp1unk reload deploy-server to make the changes take effect2.
Therefore, option A is incorrect because it does not include the reload command. Option B is incorrect because it makes the change on a deployment client instead of the deployment server. Option D is incorrect because it changes the default directory instead of the local directory.
References: 1: How to edit a configuration file - Splunk Documentation 2: Deployment of configuration files - Splunk Community

https://docs.splunk.com/Splexicon:Searchpeer
"A Splunk platform instance that responses to search requests from a search head. The term "Search peer" is usually synonymous with the indexer role in a distributed search topology..."

Reference:https://docs.splunk.com/Documentation/Splunk/8.0.5/DistSearch/SHCdeploymentoverview The deployer. This is a Splunk Enterprise instance that distributes apps and other configurations to the cluster members. It stands outside the cluster and cannot run on the same instance as a cluster member. It can, however, under some circumstances, reside on the same instance as other Splunk Enterprise components, such as a deployment server or an indexer cluster master node.

This is because the input type is UDP, which is an unreliable protocol that does not guarantee delivery, order, or integrity of the data packets. UDP does not have any mechanism to resend or acknowledge the data packets, so if Splunk is restarted, any data that was in transit or in the buffer may be dropped and not indexed.