This question is checking to see whether you understand the meaning of "displacement".
Displacement is a vector:
-- Its magnitude (size) is the distance between the start-point and the end-point, no matter what route might have been followed along the way.
-- Its direction is the direction from the start-point to the end-point.
Talking about the Earth's orbit around the sun, we can forget about the direction of the displacement, and just talk about its magnitude (size).
If we pretend that the sun is not moving and dragging the whole solar system along with it, then what do we see the Earth doing in one year ? We mark the place where the Earth is at the stroke of midnight on New Year's Eve. Then we watch it as it swings around through this gigantic orbit, all the way around the sun, and in a year, it's back to the same point that we marked !
So what's the magnitude of the displacement in exactly one year ? It's the distance between the start-point and the end-point. But the Earth came back to the same place it started from, so there's no separation at all between the start-point and the end-point. The Earth covered a huge distance in that year, but the displacement is zero.
Displacement refers to the direct distance between the end and start positions. So, if I were to walk 10m north and then 10m south, the distance covered by me would be 20m but the displacement would be 0m since I'm back where I started from. So, the answer would be zero because the earth would be back at the same spot as it was a year ago in that time.
