Answer:
It reminds them about the lost souls
reflects the mood of the story and the characters feelings
I’m assuming it means that the pencil made a loud noise as it was being sharpened?
Well a digression is a temporary departure from the main subject in speech or writing. So because the person writing the paragraph getting ill last year has nothing to do with this years cookie sale, I think you are correct, sentence 3 is an example of a digression. So D is the answer.