Their would be your second one
Based on this excerpt, what can be inferred about Oliver's neighbors is C. they think he is a bit peculiar, yet they revere him.
You can see this in the abstract because they say they find his behavior quite odd, and sometimes don't even understand him, or may be afraid of him, yet when he is in trouble, everybody takes care of him and everyone is actually there for him.
The answer is the 2nd and 3rd options.
the atmosphere that the writer creates
the emotions that a literary work evokes
