As clear as day means very obvious or easy to understand. The correct answer is this meaning because the expression is used figuratively, not only by its literal words.

Examples:

• The solution became as clear as day after the explanation.
• In an HSC essay, As clear as day can express this meaning: very obvious or easy to understand.
• When this expression appears in a passage, connect As clear as day with the idea of very obvious or easy to understand.