Irony is a situation in which the statement someway has an outcome that would not have normally been perceived.
"So foul and fair a day" is ironic because if a day has been negative is most likely isn't also seen to be positive.
I believe it would be B, because there are two subjects that the speaker is referring to at the beginning of the sentence; the caterpillar and the leaf. When they use the word "it" in the second half of the sentence it is unclear whether they mean to say if "it" is the leaf or the caterpillar which they are carrying to their brother.