The vocabulary used is more technical in nature than it is just simple statements used to define the nature of literature in simple terms.
I would put t<em>he purpose of literature </em>in the blank. The other answerer is also correct.
Given the choices, I'd pick (very hesitantly) criticism of the elements of. The description really shows what tools are used to say how good or bad literature is and what makes it good or bad. They are the tools of the literary critic.
sentence fragment because a compound sentence and simple sentence flow much better then a fragment. Also, it can not be a run on sentence because its not continuing on and on with many commas