The sentence that contains an example that helps the reader understand the meaning of "frugal" is:
Our frugal lifestyle included clipping coupons and waiting for sales before shopping.
In this sentence there is not such thing as a definition or a synonym of <em>frugal</em>, but there is an illustration or exemplification of the word that allows the reader to understand the meaning of this word.
"A. You know, of course, that she used to dive for her college swim team." does not have any errors in comma usage. "Of course" is almost always surrounded by commas.
