I'm not sure what the sample dictionary entry is, but an allusion is basically when something is being referenced indirectly. For example, I could say "I'm not the hero this town needs, I'm the hero this town deserves" and that would be an allusion to batman since I'm referencing the film without directly explaining where it's from.
A is similar to the sentence and would be the answer
The tale is told as if its happening once upon a dream
