By the skin of one's teeth means by a very narrow margin. The correct answer is this meaning because the expression is used figuratively, not only by its literal words.

Examples:

• He passed the exam by the skin of one's teeth.
• In an HSC essay, By the skin of one's teeth can express this meaning: by a very narrow margin.
• When this expression appears in a passage, connect By the skin of one's teeth with the idea of by a very narrow margin.