The correct answer is that this group of words is a sentence. It is a complete sentence, regardless of its shortness and lack of subject. It is an imperative sentence, not a fragment.
A sentence is a group of words that contains a <em>subject and a verb</em> with a <em>complete thought</em>. A sentence can be declarative, imperative, interrogative, or exclamatory. The group of one word <em>'Sit!</em>' forms a sentence because it contains the <em>verb </em> 'sit' and the <em>subject</em> 'you' is <em>understood</em>. This is an <em>imperative sentence</em>, which has the purpose to give a command. Example: "Go!" , "Stop!"