Local self-government can be best explained as an exercise in

Local self-government is best explained as an exercise in democratic decentralization because it embodies the principles of decentralization and grassroots empowerment, as enshrined in the 73rd and 74th Constitutional Amendments.

For example, Gram Panchayats can independently approve sanitation and welfare projects.

Local bodies are not federal entities like states in India.

It is not administrative delegation because local self-government bodies are political entities that are elected directly (or indirectly) by the people and managed by their representatives.

It is not direct democracy because it involves elections and indirect decision-making through representatives.

Option B is the most appropriate answer.