The excerpt shows that the narrator does not feel the sincerity of Hillary. He claims that Hillary might be wrong in his account. Interestingly, we don't know the whole truth because Hillary might have been humble in his account. The correct answer for the question is the first option - He feels that Hillary was mistaken in his account and did not tell the whole truth.
A Midsummer Night's Dream takes place across two settings: the court of Athens and the woods. Every production will have these two settings, but they could be staged in lots of ways.